Why pay tax, when you can have tax free savings?
It is prudent to have a savings habit, and the government encourages this with a range of options for tax free savings available today.
In fact, with tax-free saving so readily available and actively encouraged by that state, it is surprising that so many people still prefer to keep their money in traditional bank and building society accounts, where the savings are not tax-free.
At Principle First, our savings advisers can explain the full range of tax free savings options available, including ISA savings in a cash ISA or a stocks and shares ISA.
Would you like to learn more about tax-free savings? Contact our savings team now with an online savings enquiry or ring 0800 678 5929 now.
Tax-free savings – Individual Savings Accounts (ISAs)
Individual Savings Accounts or ISAs were introduced in 1999 as a way for consumers to be free of tax on growth in their savings.
Tax-free savings – the cash ISA
The total ISA allowance in 2012/13 is £11,280 per year.
There are certain limitations on how the allowance can be used for tax-free savings, however. Only half the allowance, or £5,640, can be invested in the cash ISA, the other half can be taken up only to save tax-free in the stocks and shares ISA.
Tax-free savings – the stocks and shares ISA
The stocks and shares ISA allows you to invest your savings in the stock markets, and stocks and shares ISAs are offered as wrappers for tax-free saving by many of the leading investment funds.
Technically, the stocks and shares ISA cannot be classified as totally tax free saving, as the Revenue does deduct 10% of dividends paid inside the account. Nonetheless there is still a considerable tax advantage, in comparison to direct stock market investments.
Stocks and shares investments are regarded as a riskier option than cash savings, but offer a potentially greater return in the medium to long term. For this reason, stocks and shares ISAs are often recommended to those who wish to save their cash for 10 years or more.
The potential returns on such longer-term savings can be attractive, however, and stocks investments have historically outperformed cash savings over 15 years or more.
Our savings team at Principle First are standing by to advise on the most suitable options for you.
Are you still paying tax on your savings interest? Contact our savings team now with an online savings enquiry or ring 0800 678 5929 now.
