Cash Q&A: Most tax-efficient way to save?

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As we are at the start of the new tax year, I wondered whether there was anywhere I can make either regular or lump-sum savings that are tax- efficient?

With the start of a new tax year, everyone over the age of 18 has a new individual savings account (Isa) allowance (over 16 for cash Isas).

The Isa allowance has risen to an Isa maximum limit of £11,520, of which up to £5,760 can go into a cash Isa, the rest into stocks and shares Isas.

There is always an element of investment risk with stocks and shares Isas so the value of your investment may fall as well as rise. Any investment into stocks and shares should also be seen as a medium-term investment.

There are a large number of stocks and shares Isa providers but seek advice from an independent financial adviser to ensure the investment is suitable for the level of risk that you are willing to accept.

Many Isa providers allow you to make regular monthly payments into your cash or stocks and shares Isa. Shop around for the most competitive interest rate for your cash Isa. If you have Isas from previous tax years check if the rate payable has fallen as many banks and building societies give customers a bonus for 12 months, after which the rate plummets. You can transfer previous tax year Isas without impacting this year’s allowance.

Other tax-efficient savings vehicles offered by National Savings & Investments (NS&I), include its index-linked savings certificates. These allow investors to invest up to £15,000 per issue and pay an interest bonus in addition to being linked to the retail prices index. Go on their website to register for the next available issue. NS&I has other tax-free investments. Visit (www.nsandi.com).

• Laura Finnie is director at Kelvin Financial Planning; Scotsman Publications Ltd and HBJ Gateley accept no liability on the basis of this article.

If you have a question you need answered, write to Jeff Salway c/o The Scotsman, 108 Holyrood Road, Edinburgh EH8 8AS or e-mail: scotsmancash@yahoo.co.uk