When you embark on money savings or money investment, you will usually be required to pay tax on the interest or income you receive. However, there are certain savings and investments that offer you a tax-free return. Also, if you are on a low income, you may not have to file tax returns; in essence, you may not have to pay tax at all. Learn about some tax-free savings ideas.

Individual Savings Accounts
The individual Savings Accounts are investment accounts that are tax-friendly or tax favored. These accounts type can be used to achieve cash savings or stocks and shares investment. There is a maximum amount you are expected to put in the accounts in each tax year. The interest or dividend accruing from an Individual Savings Account is tax-free. Also, profits resulting from investments are free of Capital Gains Tax. Nevertheless, this does not imply that you cannot use losses on Individual Savings Account to lower Capital Gains Tax on profits accruing from investments other than the ISA.

National Savings & Investments
This is an entirely secured way of saving as well as investing money since it is backed by the treasury. There’s good number of tax-free savings and investments products obtainable in National Savings and Investments. Some are structured for savers aged 16 or above, 7 and above etc. There’s also investment on bonds that can be made on behalf of children under the age of 16, the investment period is usually five years. Premium bonds can also be issued when you embark on National Savings and Investments; although you would not get interest in this investment, but you can win tax-free prizes.

Bank and Building Society Tax-free Interest
Usually, banks and building societies take away interest at the rate of 20% before paying such interest to you. However, if your taxable income is lower than your tax allowances, you can get registered in order to have your interest paid gross. Those under the age of 16 can have their parents register them. It is also possible to claim back tax paid on your savings when it was not supposed to be.

Pension Savings Tax Relief
In order to encourage savings for retirement, the government gives you tax relief on pension contributions. Tax relief works to achieve reduction of your tax bill or increase of your pension fund. By the time you retire, you can normally take up to 25 percent of your pension fund as a tax-free lump sum; this is a good way of achieving a tax-free savings. However, your regular pension income is subsequently taxed in similar way the rest of your income is taxed.

It is always a good idea to seek for every possible means of rightfully claiming back what would have been paid as tax; the few points discussed above are some of the ways you can achieve a tax-free ssavings, and subsequently boost the income of your home. In this time of economic crunch, it will pay off well to seek for means of spending less and conserving more for savings.