tax efficient savings

All the saving plans that we offer here at Shepherds Friendly Society are tax efficient. Now, this sounds great, and it really is a great benefit to growing your money, but many people may be confused about what it actually means.

Tax efficient savings

Long term saving is so important, but with constant demands from your income, we understand how hard it can be to put aside even a little bit of money per month.

Tax efficient savings plans are free of both income and capital gains tax, which means even more money for you. They are a long term investment, which means there is a bigger potential for investment growth. Also, tax efficient saving plans are not just for adults, there are versions for children to save as well.

To help you save money for the long term, if you put your savings into a tax efficient savings account you won’t pay income or capital gains tax on what you save, up to a certain limit.


Every UK resident gets an ISA allowance to save tax free, which usually increases each tax year.  ISAs are protected from the taxman, so any returns grow free of income and capital gains tax ISAs can work really well for long term savings regardless of your budget, and there are even ISAs for children called Junior ISAs. There are two difference types of ISA available and each one has a different set of rules.

Cash ISA – A cash ISA offers tax efficient savings in a deposit account, usually run by a bank, building society or mutual society. The ISA keeps your investment intact, and can offer a reasonable rate of interest. The majority of cash ISAs are instant access accounts; however there are some which lock your money in for a set period of time.

Stocks and Shares ISA – A stocks and shares ISA can hold an investment fund or funds, or individual stocks and shares. This type of Isa carries risks, and should be regarded as a medium to long-term investment.

Junior ISA– A Junior ISA is a long term tax efficient saving account for children under the age of 18. They are offered as both cash and stocks and share ISAs, and parents can apply for one of both types of ISA for their child. Parents or guardians with parental responsibility can open a Junior ISA and manage the account, but the money belongs to the child.

The child can take control of the account when they’re 16, but can’t withdraw the money until they turn 18.

Help to buy ISA

The help to buy ISA is a new product that has been introduced to help first time buyers save towards the cost of their first home. Savers will be able to make an initial deposit of £1,000 when they open a Help to Buy ISA and then receive £50 for every £200 saved up to a maximum of £12,000. The tax break will be capped at £3,000.

If you are interested in a help to buy ISA we recommend that you speak to a financial adviser.

Shepherds Friendly Society could be exactly the place you are looking for to help prepare for you and your families future. If you would like any more information on any of our plans please don’t hesitate to call us on 0800 526 249.