Help save for retirement: Brits urged to try ‘tax-efficient way’ to save | Personal Finance | finance

When it comes to saving for retirement, every bit helps toward the ultimate goal of retiring with enough money in the bank. By using alternatives to a traditional pension system, Brits have been told they could give their savings a welcome boost.

Dale Scorer, financial planner at EQ Investors, shared some tips on how people can save for retirement as efficiently as possible.

He said: “While pensions are an important part of retirement planning, they are not the only option

“Traditionally, we have viewed pensions as the primary mode of funding this chapter of our lives, and they remain the cornerstone of good retirement planning.

“However, with both the size of pension funds and the contributions you can make being limited, when planning your retirement you should consider that your income will come from a number of sources.”

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He explained: “Outside of your pension, a Stocks and Shares ISA offers a tax-efficient way to invest in the future.

“Each year you can save up to £20,000 in your shares and ISAs invested in a wide range of assets including funds and equities.”

One of the advantages of these ISAs is that all gains are exempt from UK capital gains tax.

Mr Scorere said: “You pay no UK tax on income received from your ISA. And you don’t have to declare any of this on your tax return.”

Since ISAs also have a limit on how much someone can contribute, people may still need to find an alternative to top up their retirement pot.

Mr. Scorer believes that GIAs could be the key to further complementing a retirement fund.

He said: “A General Investment Account (GIA) is a way to invest more money when you’ve used up your ISA limit for the tax year.

“Similar to the Stocks and Shares ISA, the GIA can be invested in a wide range of investments, including mutual funds and stocks.

“A GIA has no limit on how much you can invest each year, and you don’t have to lock up your money until a certain age.”

However, Brits should be aware that investment accounts do not offer the same tax benefits as pensions or ISAs

Any interest/dividends someone receives from their investments may be subject to income tax and any gains they make on sale may be subject to capital gains tax.

Although these accounts are taxable, people’s dividends and capital gains tax credits can be used before taxes become due.

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