Tax-efficient investing
Expert tips for tax-efficient investing
Discover our experts’ top tips for managing your investments ahead of tax year end and beyond.
Important information - This page aims to provide you with a summary of the different investment options, tools, apps and services available to ii customers. The investments referred to may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser. Please remember, the value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. Tax treatment depends on personal circumstances and is subject to change, but our experts have some top tips to help your tax efficient investing.
Time to take stock of your finances
“As the UK tax burden soars to its highest level in 70 years, finding ways to protect your wealth from HMRC's grasp has never been more important.
Simply put, if you pay less tax, you get to keep more of your investment growth and income.”
The first step: Review your savings and investments
Make a list of your savings and investment accounts and find out what you’re paying in fees — it may surprise you.
Once you’ve done that, it’s also worth taking a step back and looking at where your money is sitting more broadly. Money held in interest-bearing savings accounts could be losing value under the weight of inflation. Could that money be working harder in an ii Personal Pension (SIPP) or ISA?
Tax-efficient investing tips
There are many ways your investments can be taxed, from Capital Gains Tax (CGT) to tax on dividends. Taking smarter steps now could help you save on tax in the future.
Take full advantage of your ISA
The adult ISA allowance remains £20,000 this year. From April 2027, the Cash ISA limit will fall to £12,000, but you can still use the full £20,000 by putting the remaining £8,000 into a Stocks & Shares ISA.
If you have spare cash and unused allowance, topping up now gives your money more time to grow and helps protect it from capital gains tax and dividend tax, which is set to rise by 2 percentage points in April 2026.
Use Bed & ISA to lower your CGT bill
Bed & ISA can be one useful trick to reduce your CGT bill. It involves selling investments held outside a tax wrapper — like a Trading Account — and buying them back within your ISA.
As long as the gains you realise (minus any losses) stay within the current £3,000 CGT allowance for that tax year, you shouldn’t trigger a tax charge.
Maximise pension tax relief
One of the big attractions with pensions is that you get income tax relief at your marginal rate.
Basic-rate tax relief is added upfront in the form of a 25% government top up, and if you pay 40% or 45% tax, you can claim back extra via your Self Assessment.
As investment values can go down as well as up, you may not get back all the money you invest. Tax treatment depends on your individual circumstances and may be subject to change in the future. If you’re unsure if an investment account is right for you, please speak to an authorised financial adviser
How to reduce Capital Gains Tax
The CGT allowance has dropped sharply in recent years. From £12,300 to £6,000 in 2023, and again to £3,000 in April 2024 — bringing far more people into the tax net when selling assets like investments or property.
And while CGT can be costly, there are steps you can (legally) take to avoid it. The key, as with many areas of personal finance, is to plan ahead.
1. Use your CGT allowance
The simplest way to avoid CGT is to use your annual allowance each year. You can’t carry it forward, so it’s strictly a “use it or lose it” benefit.
2. Give assets to your spouse or civil partner
You can reduce CGT by transferring assets to your spouse or civil partner, as these transfers aren’t taxed. This lets you make the most of your combined CGT allowances.
3. Don’t forget your losses
Your assets and investments don’t always go up. Any losses on assets can be used to offset gains elsewhere, reducing both your total profit and the CGT you owe.
Important information: Tax treatment depends on your individual circumstances and may be subject to change in the future.
Smart pension strategies and tips
Explore the following tips to help you better plan for post-working life and make the most of your retirement.
Save for a better retirement
You can contribute up to 100% of your earnings to a pension (capped at £60,000, or £10,000 if taking flexible income) and receive tax relief.
Even small extra contributions can significantly boost your retirement savings.
Take advantage of income drawdown
Income drawdown lets you withdraw from your pension as and when you like. This flexibility is a great way to tailor income to your needs and can help control your tax bill.
Think carefully on how you draw any tax-free cash. You can take your tax-free entitlement all at once or in stages, depending on your retirement goals.
Combine old pensions into a SIPP
If you have multiple pensions with different providers, transferring them all to a SIPP could make it much easier to keep track of your retirement savings.
Having everything in one place also gives you a clearer picture of your savings — including what you’re invested in and what you’re paying — which can make planning for retirement feel more straightforward.
Important information: The ii SIPP is for people who want to make their own decisions when investing for retirement. As investment values can go down as well as up, you may end up with a retirement fund that’s worth less than what you invested. Usually, you won’t be able to withdraw your money until age 55 (57 from 2028). If you’re unsure if a SIPP is right for you, please speak to an authorised financial adviser. Tax treatment depends on your individual circumstances and may be subject to change in the future.
Long-term financial family planning
Planning for your family’s future is a team effort, so it’s good idea to look at your options to help you and your family invest smarter.
Plan for your children’s future
There are many ways to support your children's financial future, and one of the best is investing in a Junior ISA.
With a JISA, you can contribute up to £9,000 per child per year and invest this in the stock market.
Plan your finances jointly
If you’re married or in a civil partnership, managing your finances together can bring real benefits.
For starters, you can combine your annual tax-free allowances and exemptions, giving you more scope to protect your wealth from tax.
Plan for your family’s finances
Encouraging close family members to start investing can help you build a more secure future together.
If providing for your loved ones is important to you, involving them in your investment journey can make a real difference.
Save on fees when you combine your investments
Having all your investments and accounts in one place could save you time and money.
With ii, you can bring your ISAs, pensions and investments together and benefit from our low, flat fee.
Find your next investment
Take a look at our recommended investment lists and options to inspire your next move.
SIPP investment ideas
Get some inspiration to help you invest for your retirement.
ISA investment ideas
Find out how you can make the most of your tax-efficient allowances.
Money market funds
Discover how these low risk investments can offer an alternative home for your cash.
International investing
Diversify your portfolio by investing in global markets like the US and Canada.
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