Pay Less Tax On Savings And Investments

6 Things You Need To Know

  1. Transfer Assets – If your wife or husband is paying a lower rate of tax than you do, you can transfer your savings and investments to them in order to pay less income tax.
  2. Dividend Allowance – The first £5,000 you receive in dividends is tax-free. Basic-rate taxpayers will pay 7.5% tax on dividends they receive above the threshold, higher-rate taxpayers pay 32.5% and additional-rate taxpayers pay 38.1%.
  3. Personal Savings Allowance  The first  £1,000 of interest you receive from savings is tax-free if you are basic-rate taxpayer. If you are a higher-rate taxpayer, the threshold is £500. There is no savings allowance if you’re an additional-rate taxpayer.
  4. Individual Savings Account (ISA) Allowance – If you are thinking about saving or investing, Individual Savings Account is a tax-free way to do it. It’s offered by banks, insurers, asset managers, building societies and National Savings and Investment. There are four types of ISA; cash ISAs, stocks and shares ISAs, innovative finance ISAs, and Lifetime ISAs wherein you can save up to £20,000 a year tax free. The allowance can be in one type of account or split  across the different types.
  5. Junior Individual Savings Account (ISA) – The annual allowance for Junior ISAs is £4,128 for 2017/18 tax year. You can use this ISA allowance or Children’s Bonus Bonds to avoid being taxed on gifts you make to your own children.
  6. No Capital Gains Tax on shares held in an ISA – There is no Capital Gains Tax to pay when you sell shares or units held in an Individual Savings Account (ISA).