16:37 12 March 2013
The money that you earn from your investments might be subjected to tax. This tax is generally calculated depending on the type of investment or savings that you have and what other type of income you receive.
Depending on the amount of your savings income, you may need to pay 20per cent, 40per cent, or 50per cent tax. The rule of thumb is here, the more you earn, the higher the tax. On the other hand, taxes on dividends are at 10per cent, 32.5per cent, or 42.5per cent.
If you want to save on taxes, (well, who doesn’t?), you can choose investments that offer tax benefits such as ISAs or Individual savings account. The income you receive from your ISAs are not subjected to tax (as long as you don’t exceed the limit).
In fact, you don’t even have to declare them.
If however, you decide to have regular savings account, the money you receive in form of interest is subjected to tax. You are also most likely to accrue this type of interest on National Savings and Investment products, gilts, corporate bonds, local authority investments, and unit trusts or open-ended investment companies.
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