Getting the right combination of ‘tax-free’ investments during the client’s lifetime can deliver fantastic results, but keeping things tax-free may not always deliver the most tax-efficient outcome and, more importantly, the highest net return, explains Mark Devlin...
The term ‘tax-free' is used frequently in financial planning in relation to ISAs, pension commencement lump sum (PCLS), beneficiary's drawdown etc. But it's often a misnomer as there are some taxes that may apply. Does this raise the question, is tax-free always tax-efficient? As an example, at time of writing, I checked a comparison site and looking at an instant access cash ISA for a £10,000 investment the best rate available was 0.6%. Only £60 interest in the first year, but tax-free. The best rate for an instant-access savings account was 0.65%. That's £5 more, but all taxable. Bu...
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