News and Views
Tax Efficient Savings Vehicles

Onshore Bonds.
5% can be withdrawn per annum tax-free. Any amount taken over this will be tax-free as long as the gain element when added to your other income for the year is taxable within your basic rate band. The current level of income you can receive before higher rates apply is £35,115.

ISA (individual savings account)
Up to £7000can be invested per annum, although only £3,000 may be invested in cash. Interest is tax-free. Dividends are tax-free but these will be anyway if your income does not enter the higher rate (if it exceeds £35,115 p.a.). However any capital gains will also be tax-free but you have an annual £7,500 capital gains tax exemption anyway so this may be a mute point.

It is important to remember when comparing interest-bearing accounts it is only the real amount of interest that you receive that will be important. Having said this most ISA accounts provide a rate equivalent to the comparable taxable account.
www.moneyfacts.co.uk is probably the best place to compare interest rates.

Stakeholder pensions
There is potential (if other large pensions contributions are not being made) to invest up to £3,600 gross. As tax relief is given at source so you only need to actually pay £2,808. Pro's are that the funds will roll up tax free with little initial charges. It is possibly a good time to invest whilst the stock market is low if you think it is likely to recover. The fund rolls up as for any other pension and the funds must be taken at 75. 25% of the fund invested can be taken tax-free. The balance will be taxed at your normal tax rate when taken.