Want to save tax this year? Read this week’s short Tax Tip, tailored for UK doctors and dentists to help you save money and get more organised with your tax affairs. Take 5 minutes to have a read.
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. The Financial Conduct Authority does not regulate tax advice.
5 ways to pay less tax on savings & investments
With the rate if interest so low at present, savers and investors are often booming disheartened with poor returns.
At the very least it is wise to save as much tax as possible on your savings or investment income.
Here are 5 considerations:
(1) Use the £5,000 savings allowance
If your income, or that of your partner or spouse is less than the £11,500 personal allowance, then you could access the £5,000 savings allowance. This means savings income can be earned to this level completely tax free. Added to an income, means you could earn £16,500 without any tax implication.
(2) Utilise your ISA allowance
From April 2017, the ISA allowance is set at £20,000, meaning you can save up to this amount and incur no tax on the interest earned.
Your investment into an ISA can be into a Cash ISA, a Stocks & Shares ISA, or split between them. This is therefore a flexible, tax-efficient way to save.
(3) There is no CGT on shares held in an ISA
In addition, when you come to sell shares that have been held in an ISA there is no Capital Gains Tax (CGT).
(4) Junior ISAs avoid tax on gifts
If you pay into a Junior ISA (JISA) for your children, there is no tax either on the income earned. The annual allowance for JISAs for 2017/18 is £4,128.
(5) Utilise the tax-free dividend allowance
There is now a tax-free dividend allowance of £5,000. Dividends will be exempt from tax to this level. If you are investing with a partner or spouse, consider the allocation of shares to utilise both your allowances each year.