Facts about funds
- Home »
- Investor centre »
- Facts about funds »
- What tax you might need to pay
What tax you might need to pay
| Investing in a fund through an ISA or pension (sometimes called tax wrappers) can have substantial tax benefits and you might not have to pay any tax at all. But investments made outside these wrappers are likely to incur tax. |
About ISAs
You can invest £10,680 a year in a stocks and shares ISA if you are over 18. There is no income tax or capital gains tax to pay on any income or profits you make on your ISA investments. You can access the money invested whenever you want it and you don’t have to include details of any ISAs on your tax form.
Junior ISAs, for those under 18, are also now available.
Find out more about investing in ISAs
Find out more about investing JISAs
About pensions
Pensions are another way of investing for the long term and saving tax. You get tax relief on the money you pay into the pension, which means you get extra money from the government to invest in your pension. However, you cannot access the money invested until you reach at least age 55 or retire.
Paying tax on your investments
Income tax is payable on the income you earn on your investments, and capital gains tax may be payable on any profits when you sell. Careful planning, including the use of ISA and pensions allowances, can minimise the amount of tax you need to pay.
Find out more about paying tax
Tax and investing may be an area where you feel that you would like professional advice. You may wish to get professional advice from an accountant. Financial advisers are trained to understand this aspect of investing.
If you receive investment income outside an ISA or pension and you are a taxpayer, then you may need to complete a tax form. To find out more, read our guide 'Investment Funds and Income Tax'.
How funds are taxed
The way funds are taxed depends on what the fund invests in. If you are investing in a fund via an ISA or pension you might want to consider choosing more tax-efficient types of funds. In order to do so, you need to understand the basics of how funds are taxed.