Savers and investors get a range of tax breaks and incentives that are designed to encourage them to make smarter decisions for their wealth. Tax relief on pension contributions and the £20,000 Isa allowance have escaped government tinkering, despite costing the Treasury billions of pounds. Tax breaks on pensions cost £70 billion a year, the latest figures show.
But underneath all that, the government is sneakily taking an increasing share of the spoils made by those who risk their own money on the stock market. And you may not realise it.
A flurry of recent rate increases and cuts to tax-free allowances helped raise as much as £50 billion from savings and investments in the last tax year — just as the chancellor plans to nudge savers to invest more in a bid to boost economic growth.
The tax breaks you have lost
Interest and returns made on savings and investments held in Isas are free of capital gains tax (CGT) and income tax. However, the £20,000 annual allowance has been frozen since 2017 and won’t go up until at least 2030 — saving the government an estimated £605 million a year by that point.
