Tax-efficient savings and investments

Pensions

Investing in a pension plan gives you the following tax advantages:

• Pension tax relief: Not all pension plans work this way, but typically you will get tax relief on the money you pay into your pension plan. For example, if you're a basic rate taxpayer and put £80 into your pension plan, HMRC will pay an extra £20 into your pot. This is known as pension tax relief. This could effectively be even less if you're a higher or additional rate taxpayer. If this applies to your situation, you can normally claim any extra tax relief through your self-assessment tax return or by contacting HMRC.
• Tax-efficient growth: As your pension pot is invested it could grow in value over time. You won't pay tax on this growth.
• Tax-free lump sum: From age 55 (rising to 57 in 2028), you can normally take 25% of your total pension pot as a tax free lump sum. You don't have to take the lump sum, and can choose to keep it invested so it has a chance to potentially keep growing.

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.

Inheritance tax

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.

Find out more about inheritance tax planning