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Pensions and ISAs are both tax-efficient ways to save money for the future. Read on to find out why and what this could mean for your money.
When you save or invest money into an ISA, any interest or investment growth you get is tax efficient. You also don't have to pay any tax on money you take out of an ISA.
However, there is a limit on how much you can save or invest in an ISA each tax year, known as the annual ISA allowance. For 2020/2021 this is £20,000.
You can put all your money into one type of ISA or you can split your money between different types. For example, you could save £5,000 into a Cash ISA and invest £15,000 in a Stocks & Shares ISA.
You can learn more about ISAs, apply for an ISA and more here:
Investing in a pension plan gives you the following tax advantages:
You can find out more about how pensions work, tax relief and more in our pensions basics guide:
You can also download a factsheet about how pension tax relief and limits work here:
Inheritance tax may be due on your restate when you pass away. We've provided a link below to the Government's site where you can find out more about this.
You can get more information about pension plans and Stocks & Shares ISAs, and what they could mean for your long-term savings.