Can ISA’s be Tax Efficient Methods of Creating Savings?


While the statistics continue to point towards long-term economic growth in the UK, it cannot be disguised that the current climate is rather more foreboding. Mortgage and savings rate in Britain have remained at rock-bottom levels for just over five years, for example, ever since the Bank of England (BoE) cut its interest rate to just 0.5%. Despite regular forecasts that this rate would begin to rise steadily as the economy revived, this has not yet proven to be the case and there are suggestions that the British economy is currently built on unstable foundations.


The Great Savings Crisis:

While the people of Britain may be facing a savings crisis, in many ways there has never been a better time to retain or even optimise your hard earned capital. Thanks to a continual process of innovation and the commitment of financial service providers such as Killik & Co, citizens now have access to a diverse range of savings options and alternative account types. ISA’s (Individual Savings Accounts) are among the most popular, primarily because they offer owners the flexibility to control their investments while benefiting from a number of unique tax advantages.

ISA’s afford you access to a wide range of financial instruments, including UK equities, bonds and exchange traded funds. These can stand alongside basic cash investments, and create a secure and sustainable source of wealth for later life. The single greatest advantage of an ISA is that any acquired gains on your investment are tax free, while there is no further tax to pay on any affiliated income. As a result, you are not required to report the details of an ISA on your tax return or register the return that it accumulates.

Beyond ISA’s: SIPP’s and Flexible Pension Plans

On a similar note, serious investors who wish to make the most of their capital may even want to consider the benefits of a self-invested pension plan (SIPP). Similar to investment accounts such as ISA’s, these financial entities offer you flexibility in terms of how you build and utilize your retirement funds, whether you follow the traditional path of purchasing an annuity or pursue a course of income drawdown. The latter option offer far more freedom to investors and this is nice to rely on if you like to build your assets and accumulate wealth over time. This is important to bear in mind, while it also underlines the importance of seeking out viable professional advice from a reputable financial service provider before planning your retirement.


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