Why pay tax on your savings, when you can have a tax free ISA
Did you know that interest from savings in a bank or building society account is subject to income tax, just like your salary? Your savings growth is taxed at your marginal rate i.e. the same rate as your salary – whether it be 20% for lower earners or 40% for higher earners. Your interest is paid net of tax, in other words, the tax is taken out before you see your interest in your account. You can avoid tax by saving in tax free ISAs.
ISA savings are possible using either of the 2 ISA accounts – the cash ISA and the stocks and shares ISA.
Are you paying tax you don’t need to pay? Ask us about a tax free ISA today with an online savings enquiry or by ringing 0800 678 5929 now.
However, for the sake of accuracy it must be mentioned that these are not both totally tax free ISA accounts, as many claim.
The cash ISA is indeed a completely tax free ISA account, with the same level of security as a bank account but at the same time allowing tax free isa savings.
The stocks and shares ISA does have a 10% tax levy on part of the income within the investment fund or funds you choose, and so, technically speaking, it provides tax efficient saving, but still at a considerable tax advantage compared with bank or building society accounts.
How much can I save in a tax free ISA?
The current ISA allowance for the tax free ISA (i.e. the cash ISA) is annual savings of £5,100. However, you can save the same amount again in the stocks and shares ISA, bringing your total annual ISA allowance to £10,200. Alternatively you can save the whole £10,200 in the stocks and shares ISA, if you have no cash ISA savings. However, this does not work the other way around – you cannot place this full annual allowance in cash – £5,100 is the maximum you can add this year (2010/11) in cash to your tax free ISA.
Are you still paying tax on your savings? Ask us about a tax free ISA today! Make an online savings enquiry or ring 0800 678 5929 now.
