CHOICE: Invest in Pensions or ISAs, or both?

Is it better to invest into an ISA or a pension? You do not have to choose one of the two, you can choose both. Both ISAs and Pensions offer different methods to save your tax and help meet your financial needs. Contact us to understand more about these investments.

Below is a table that details the differences between ISAs and pensions:

Pensions

ISA

Can contribute up to the lower of your income or £40,000 each year

Can contribute up to £20,000 in every tax year

Money in the pension is tax free. Tax relief on pension contributions. When you are 55 (57 in 2028) 25% can be withdrawn as a tax-free lump sum, but the rest could be taxed

Money in ISA is tax free. ISAs are free from Personal Income tax and Capital Gains tax No tax payable when you take money out of your ISA

 

Not access money until aged 55 (57 in 2028)

Can access money whenever you like

The value of investements and the income they produce can fall as well as rise. You may get back less than you invested. Tax treatment varies according to individual circumstances and is subject to change. Investors do not pay any personal tax on income or gains, but ISAs do pay unrecoverable tax on income from stocks and shares received by the ISA managers.

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