In addition to tax-efficient accounts such as ISAs and SIPPs, you are entitled to further tax relief when saving / investing.
Your personal savings allowance enables you to earn an amount of tax-free savings income each year, depending on your tax band.
Tax-free savings income allowance
|Basic rate taxpayers||£1,000||£1,000|
|Higher rate taxpayers||£500||£500|
|Additional rate taxpayers||-||-|
Income earned in tax-efficient accounts, such as ISAs and SIPPs, does not count towards your personal savings allowance.
Your dividend allowance allows you to earn dividend income free of tax.
Income Tax on dividend income in excess of allowance
|Basic rate taxpayers||7.5%|
|Higher rate taxpayers||32.5%|
|Additional rate taxpayers||38.1%|
Income earned in tax-efficient accounts, such as ISAs and SIPPs, does not count towards your dividend allowance.
Both your Personal Savings Allowance and your Dividend Allowance are in addition to your Income Tax Personal Allowance, which is £12,500 for the 2019/2020 tax year.