Almost all of the potential growth in ISAs is tax free. The annual ISA allowance for 2014-15 is £15,000. This can be split between Cash ISAs and Stocks & Shares ISAs as you want.
Investing in a pension gives you several tax advantages:
- You get tax relief on the money you pay into your pension.
- Your pension grows virtually tax free.
- You can take part of your pension pot as a tax-free lump sum.
You might not be able to avoid inheritance tax (the tax to be paid on your estate when you die) completely.
As with any investment, the value can go up or down, and may be worth less than you paid in.
Laws and tax rules may change in the future. The information here is based on our understanding in October 2014 and your personal circumstances also have an impact on the taxes you pay.
The value of pension tax relief can change and is dependent on your individual circumstances.