Tax-efficient saving vehicles for UK residents

Collaborative Post

If you live in the UK, there are some really good ways to save for your family’s future. Today, I thought I would take a look at the ones I have been told are the most tax-efficient. But, before I start I must just say that I am not a trained financial advisor. So, before actually investing in any of these, please do some more research and maybe speak to a financial advisor. But, hopefully, the ideas below will help you to get started with saving in a tax-efficient way.

Tap into ISAs

An ISA from Wealthify is one option. They are really easy to set up and anyone can qualify for one. Even your newborn baby can have an ISA. The fact that there are currently 7 different types of ISAs available means that finding one that works well for your financial situation is not that difficult.

Top up your pension

Pensions are something I have written about in the past. I am a great believer in periodically reviewing your pension plan and tweaking things.

In general, most people could do with putting aside a bit more cash for their retirement. All of the statistics indicate that more of us are not saving enough for our pension than are. This is despite the new auto-enrolment scheme. Many of us are just too old for this change to force us to save enough for our pensions.

So, most of us desperately need to review the situation and step up the amount we are saving for our retirement. If you do, there are two potential tax benefits. This article explains things very clearly. But, again before you invest more in a pension scheme do some research and speak to a financial advisor if you can.

Investing in businesses

There are lots of ways to invest in businesses, including starting your own. But, not all of them are tax-efficient. One that is, at least at the time of my writing

this article is venture capital investments. That is to say three specific forms of it. They are Venture Capital Trusts (VCTs), Enterprise Investment Schemes (EISs) and Seed Enterprise Investment Scheme (SEISs). You can easily find out about all of these options online as well as discuss then with your financial advisor.

Why seeking out tax-efficient ways to save and invest is still sensible

I know that some of you who are reading this article will be scratching your head a bit. Wondering why it is still important to seek out tax-efficient ways to save and invest. After all, since April 2016, basic rate taxpayers have not had to pay tax on interest that adds up to less than £1,000. Because most people do not meet that threshold a lot of savers have stopped seeking out tax-efficient ways to save and invest. This kind of makes sense, but you need to bear in mind that tax laws change all of the time. Potentially, in the next budget, the Chancellor could go back to taxing interest in the way he did before. In that situation, someone with an ISA would still be able to lawfully not have to pay any tax on the interest from their savings. Yet everyone else would. So, in the long-term continuing to seek out and use tax-efficient savings vehicles actually do still make a lot of sense.


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