Tax talk made easy
3 smart ways to save and invest tax efficiently.
1. Use that ISA allowance
Think of ISAs as your financial secret weapon: a simple, tax-efficient way to save or invest up to £20,000 this tax year.
Whether you're building a rainy-day fund or investing for the long term, adding money to your ISA means any growth or income stays free from UK tax.
2. Pay into your pension
Your pension is one of the smartest moves to prepare for later life, because it offers a number of tax advantages.
For example, for every £80 you pay in, HMRC will add £20 tax relief, bringing your total contribution to £100. If you’re a Higher or Additional-rate taxpayer, tax relief can be worth double that or more.
If you’re a member of your employer’s pension, they may match what you pay in and sometimes even more. Maximising employer contributions is a no-brainer.
3. Holding investments? Know your allowances
If you own investments outside an ISA or a pension, you could earn in different ways — such as dividend payments, interest or capital gains. But these are usually taxable.
The good news? You’ve got tax allowances to use first this tax year: £3,000 for capital gains and £500 for dividends. There's also a personal savings allowance for interest earned on savings and investments (£1,000 for Basic-rate taxpayers, and £500 for Higher-rate taxpayers).
Make sure you use them to the full to keep more of your gains.
The value of investments, and the income from them, can fall as well as rise and you may get back less than you invest. Investments should generally be held for five years or more. Tax treatment depends on individual circumstances and may change in the future.
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