If you are an account holder of a regular bank account in the United Kingdom then you will be aware that when you save money in your account you are paid interest on any savings that you accumulate. This interest is subject to income tax, which means that money will be taken off of the total amount. However, if you are looking for a way to save money and gain interest without having your savings subject to income tax then there is a way around this, you can open a tax free savings account. There are three main types of tax free savings accounts that you can open, and each offers something different.
The first kind of tax free savings account that you might want to look into is an ISA. With an ISA your savings can be invested in stocks and shares, and there are no tax deductions for you to have to worry about. There are currently many different finance companies in the United Kingdom that offer great deals on ISA accounts. You usually have to be over the age of eighteen, and you will have to prove your identity before you open an account. An ISA is probably one of the most popular form of tax free savings accounts.
The next form of tax free savings account is an NS&I, or National Savings and Investments. This solution offers a range of different investment opportunities such as savings certificates. There are two different kinds of savings certificates offered by NS&I, fixed interest, and index-linked. These, of course, are tax free, which means that again, you will not have to worry about any income tax being deducted from your overall savings. There are many different companies that offer NS&I, each company will differ from the next.
The next kind of tax free savings account are personal pension plans. Everyone who has a full time job will have looked into personal pension plans and will more likely than not be well informed on the options available to them. The money that you invest into your personal pension plan is tax free, and will go into a savings account that you can take out once you retire.
All three of the options mentioned above are fairly simple ideas, and they all give you the opportunity to invest in a savings account without losing out on interest due to income tax deductions. Also, if you are looking for a tax free savings account for a child then there are many options available. Some banks will have specific account options designed to make saving for the future easier. The best thing to do is to shop around to make sure that you are getting the best deal possible.