Without a carefully developed tax planning strategy, higher-rate taxpayers run the risk of missing out on key tax benefits and paying more in taxes than necessary. A higher tax liability can diminish the value of your investment earnings over the long term.
To start with, it’s important to look at how you might be able to minimise tax along the way. In other words, reduce tax where you can, but don’t allow it to be your sole driver when making investing decisions or steer you away from achieving your core financial goals. The more tax wrappers and annual allowances you use, the more money you’ll be able to save and invest for your future.
Where can you turn if you want to invest tax-efficiently?
Individual Savings Accounts (ISAs)
One of the most straightforward ways to invest tax-efficiently in the UK is to invest within a Stocks & Shares ISA. They are very flexible and allow you to access your money at any time, and all of the proceeds taken are free from tax on capital gains, dividend income and interest.