If you are looking to put money aside for a rainy day, then you should consider these tax-free savings vehicles to make the most of your hard-earned money.
One of the most tax-efficient ways to put savings aside for the future is through an Individual Savings Account (ISA).
An ISA allows you to save £20,000 per tax year without paying tax on interest or investment gains.
Note that the ISA allowance is per individual, not per ISA. You can save the entire £20,000 into a single account, or spread your allowance over multiple accounts.
You will incur a lifetime ISA government withdrawal charge (currently 25%) if you transfer the funds to a different ISA or withdraw the funds before age 60 and you may therefore get back less than you paid into a lifetime ISA.
By saving in a lifetime ISA instead of enrolling in, or contributing to an auto-enrolment pension scheme, occupational pension scheme, or personal pension scheme:
You may lose the benefit of contributions from your employer (if any) to that scheme; and
Your current and future entitlement to means tested benefits (if any) may be affected.
Similar to a regular savings account, the interest on your savings is tax-free and does not count towards your Personal Savings Allowance. You may get a higher interest rate on a ‘fixed’ ISA, which locks your savings away for several years.
You can open a Junior ISA for your child or any individual under 18 for whom you have parental responsibility. You can save up to £9,000 into a JISA in any one tax year.
This type of ISA enables you to invest in stocks and shares without paying tax on any returns.
This is a special type of ISA with an annual contribution limit of £4,000. Each year, you get 25% bonus on your savings from the government, up to a maximum of £1,000. There are limits on withdrawals, with hefty tax penalties for accessing your savings for any other reason than to buy a home or draw income for your retirement. With a LISA you are able to hold your money in cash or invest in stocks and shares. LISAs are designed for those aged 18 to 40 wanting to save for their first home or retirement, with the added attraction that they can save until they are 60 if they wish to. People under the age of 40 are able to contribute up to £4,000 in each tax year. Government bonuses apply up to age 50.
Premium Bonds are tax-free investment accounts owned by National Savings and Investment (NS&I). Rather than paying out regular interest or dividend payments, these accounts enter users into monthly prize draws where they can win between £25 and £1m free of tax.
You can save a maximum of £50,000 into your Premium Bonds account. The more bonds you purchase, the more times you will be entered into the monthly prize draw.
You can open a Premium Bonds account for yourself or on behalf of a child aged under 16.
Premium Bonds may not be suitable for you if you are looking for regular, guaranteed returns – however, the prize draw offers the potential (although small) opportunity to win more than you would make in interest or dividend payments.
For professional advice on your tax-free savings strategy, please feel free to speak to one of our expert advisers.
The guidance and/or information contained within the website is subject to the UK regulatory regime and is therefore primarily targeted at customers in the UK.
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Estate Planning, Trusts, and Tax Planning advice is not regulated by the Financial Conduct Authority.
The value of pensions and the income they produce can fall as well as rise. You may get back less than you invested.
The value of investments and the income they produce can fall as well as rise. You may get back less than you invested.
Registered Address 4 Finkin Street, Grantham, Lincolnshire, England, NG31 6QZ.
Approver Quilter Financial Services Limited June 2025
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