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You have an annual ISA allowance, you can invest that each year into an ISA of your choice. You don't get any tax rebate on what pay into an ISA but when you get the money out again you don't incur income or ctg tax. You don't need to include this on your tax return.
You get tax relief (up to a point) on your pension contributions but then you pay income tax when you come to draw down on your pension.
ChasnotRobert-
I'm about 6 cans of Monster away from understanding what any of this means.
I understand the allowance (it's made up of a cash portion and a S&S portion or something).
What I don't understand is where I'm being taxed when I use an ISA cash product versus a Bonus Saver cash product.
For arguments sake, if I stick £5k into a Bonus Saver at 4% versus doing the same with an ISA - what's the practical difference? Am I supposed to declare the interest earned as income or something with one of them and not the other?
hippy
So people declare they're putting money in an ISA when they do tax returns or the bank takes the tax out on deposit or what?