One way to stop tax eating into your money is to put your cash into a tax-efficient savings and investment wrapper such as an Individual Savings Account (ISA).
A Stocks and Shares ISA can include individual shares or bonds, or pooled investments, such as investment trusts.
The main advantage of investing in a Stocks and Shares ISA is the potential for higher returns than with a Cash ISA, which will pay interest at regular periods. NFU Mutual offers a choice of stocks and shares ISAs. Many providers offer Cash ISAs which offer a safe savings option, but savings growth can be low when interest rates are low.
It's important to remember that the value of stocks and shares can go down as well as up, so you might not get back the amount invested.
Annual limits on ISAs
Because of their tax advantages, there is an annual limit on how much money you can put into ISAs. The limit for the 2016-17 tax year is £15,240.
You can use your full annual £15,240 allowance to invest in a Stocks and Shares ISA or in a cash ISA with one provider, or you can split this amount (£15,240) between a cash ISA and a Stocks and Shares ISA.
Both income and Capital Gains from a Stocks and Shares ISA are tax-free.
You can reduce your tax bill further by structuring your savings, so they're owned by the lowest-rate taxpayer within a marriage/civil partnership. However, you should note that this is classified as a gift and you would lose ownership of the asset.