• Savings is a financial term which needs no explanation. It is the simple process of putting money away on a regular basis to create an amount either to spend on proverbial rainy day or for a specific future event.

    Whatever the reason for saving, MAP can advise on the best way ahead for you, taking your attitude to risk into consideration. Using a trusty bank account may not be the best solution any more.

Regular Savings

If you attempted to save money using a bank account, you would gain interest from the bank. This interest is deemed income, so is subject to income tax. But who wants to pay income tax on their savings? The main pitfall to watch for when choosing a savings scheme is the tax implications; in particular Capital Gains Tax (CGT), although maybe income tax too. Advice from MAP could help here.

If you put money away on a regular basis, MAP’s advice is always to use an ISA first, followed by GIA/unit trust/OEIC. Then, when it comes time to cash them in, you will hopefully be within CGT limits.

You may be a non-taxpayer and so can elect to receive interest gross, but you will need to make a full HMRC declaration. If you are subject to income tax, interest is taxable. You would then be better using something to give growth, so as to avoid income tax. Growth is subject to Capital Gains Tax (CGT) but not income tax. It makes sense to use your annual CGT allowance when saving, but from our experience, very few people do.

People can save through GIAs/unit trusts/OEICS and be subject to CGT rules, or they can save through ISAs (within the annual limit). ISAs do not have any Capital Gains Tax which makes them attractive, but again it depends on previous usage.

All in all, it is best to seek independent advice, which MAP offers. We would be happy to advise you on the best approach for you, in your situation, using our bespoke investment cycle. So contact us today and arrange an appointment. Alternatively, you can start an online ISA without any advice whenever you want.

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