6 Things You Need To Know
- 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.
- 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%.
- 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.
- 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.
- 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.
- 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).