The tax hacks to help you keep more of your money

Important information - the value of investments and the income from them, can go down as well as up, so you may get back less than you invest.

“I wish I could pay more tax,” said no one, ever. That’s why the money wise make the most of their allowances and tax-efficient accounts.

To make sure you’re not leaving any tax-efficient stone unturned, here are our top ‘hacks’ to help you keep more of your money when you invest with us.

Tax-efficient accounts - know them, use them

ISAs and Self-Invested Personal Pensions (SIPPs) are kind of tax ‘safe havens’, as you don’t have to pay Income Tax or Capital Gains Tax (CGT) on any returns you make.

• Open an ISA
• Add cash to your ISA
• Give your money more potential to grow. Plus win up to £20,000. T&Cs apply

SIPPs have the additional benefit of tax relief, where the government tops up any contribution you make up to the annual allowance.  For example, if you contribute £80, the government adds £20, making it £100. Higher-rate taxpayers can claim additional relief through their tax return.

• Open a Self-Invested Personal Pension (SIPP)

There are also junior versions of both of these accounts. A Junior ISA will become a standard ISA when the child turns 18. They are then in control of it and can do what they want with the investment money held in the account.

• Open a Junior ISA

Likewise, with a Junior SIPP, the child takes control of the account on their 18th birthday. They can’t access these savings until they turn 57 (these are the new rules from 2028, up until then the age remains at 55).

• Open a Junior SIPP

These accounts come with their own allowances. You can see what these are for 2025/2026 in the table below. It really can pay to make as much out of these as you can.

2025/2026 account allowances - use some, or all

These are the maximum amounts you can pay into these accounts while benefitting from the associated tax perks. Don’t be put off by the maximums, the idea is to make use of what you can afford. It all adds up in the long run.

• Learn about tax allowances

Capital Gains Tax and Dividends allowance - not what they used to be

Both allowances have steadily declined over the past three years - making it more important than ever to make use of your other tax-efficient allowances.

Capital Gains Tax (CGT) - CGT is applicable on any investments that you hold outside of an ISA or pension - such as in an Investment Account. If these investments have made a profit when you dispose of them (by selling, gifting or swapping for something else), you may need to pay CGT.

• Read more about Capital Gains Tax

Dividends allowance - A dividend is an amount of money paid by a company to its shareholders. If your dividend payment is above your allowance, you'll pay a tax rate according to your Personal Income Tax band. You don’t pay tax on dividends from shares in an ISA.

Dividends taxation

Scottish Income Tax rates do not apply to dividend income. All UK tax payers are taxed at the rates below using standard UK bands when the allowance is exceeded.

The best of the rest

Carry Forward - Remember to take advantage of the 'carry forward' rule, which lets you use any unused allowance from the past three years to contribute more to your pension while still enjoying all the tax benefits.  

• Read more about Carry Forward

Money Purchase Annual Allowance - From age 55 (57 from 2028), most pensions allow you to withdraw up to 25% of your savings as tax-free cash. However, be cautious: if you withdraw more than the 25% tax-free amount, your annual allowance for future contributions will be replaced by the Money Purchase Annual Allowance (MPAA), limiting you to £10,000 a year. This rule aims to prevent people from avoiding tax on current earnings or gaining tax relief twice by withdrawing and reinvesting pension savings.

• Read more about MPAA

Tax-free allowance - You can earn up to £12,570 tax-free until April 2026. This means the first £12,570 you earn, whether from employment or other types of income outside a tax-free account, is completely tax-free.

Marriage / spousal allowance - If you're married or in a civil partnership, the marriage allowance lets the lower earner transfer £1,260 of their personal allowance to their spouse. The lower earner must have an income below £12,570. The higher earning spouse, who must be a basic rate taxpayer, will receive a tax credit for the transferred amount, reducing their tax bill. In Scotland, you can claim marriage allowance if the higher earner's tax rate is starter, basic, or intermediate. If you or your partner were born before 6 April 1935, you might benefit more from the Married Couple’s Allowance.

Personal savings allowance - Your personal savings allowance is how much you can make in interest from your savings each year tax-free, depending on what rate of income tax you pay. 

Scottish Income Tax rates do not apply to savings income. These are taxed at the standard UK rates.

Let’s not forget… your pension and Inheritance Tax (IHT)

Back in October’s Autumn Budget 2024, Rachel Reeves proposed - among other reforms - to bring pensions into the scope of Inheritance Tax. The idea is that starting from April 2027 inherited pensions (excluding spouse’s and dependants’ pensions from defined benefit schemes) will be included in the value of the estate for IHT purposes. The government is currently considering industry feedback from a consultation on how to make this work in practice.

This supercharges the already emotive topic of passing on your wealth. The good news is there’s a lot you can do before your time comes to ensure your loved ones can benefit from your generosity while you’re still around to witness it… with no IHT implications.

• Learn more about IHT, gifting and passing on wealth
• 5 tax hacks: how to make financial gifts without a big tax bill