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Tax-efficient savings and investments

If you are looking to save or invest, it is worth bearing in mind that there is a restriction on the amount which you are allowed to invest in tax-free products. There are a number of ways to make the most of this allowance and which one you choose will largely depend on your personal circumstances.

The most popular way to save tax-free is through an Individual Savings Account, or ISA. There are two main types of ISA, one is a straight forward cash account, where you can place up to £5,100 every tax year. Instant access ISAs are available, but many require you to leave the money in place for a certain amount of time, or give notice for when you wish to withdraw your money.

You can also invest up to £5,100 tax free in a shares ISA per tax year. Alternatively your entire allowance of £10,200 can be placed directly into a shares ISA. An investment ISA allows you to hold assets such as shares and funds. All your investments are held within the one account and any growth on them is tax-free. Corporate bonds and gilts can also be held in an investment ISA. This means that the fixed rate of interest you are paid on the bond is tax-free.

Should you wish to split your tax free allowance between savings and investment ISAs, you do not have to hold both ISAs with the same provider.

If you would like to discuss your options for tax-free savings and investments, speak to an Independent Chartered Financial Planner, for unbiased advice on the best ISA for you.