Make full use of your ISAs

rate taxpayers). With cash ISAs, all interest is tax-free. With stocks and shares and other ISAs, such as the soon-to-belaunched Lifetime ISA, there is no tax to pay on income or capital gains from your investments.

Pensions work in the opposite way to ISAs. You get tax relief on the way in, but pension income is generally taxable.

However, you can take 25 per cent of the plan’s value as a tax-free lump sum.

Under recent pension freedoms, you have considerable flexibility over how you draw an income. By choosing the timing and amount of withdrawals to fit in with your other income you can limit the tax you pay.

Other savings and investments vehicles, including Venture Capital Trusts, offshore bonds and even Premium Bonds could also be worth considering.

These investments can be used alongside ISAs and pensions to build up a tax-efficient income portfolio for the long term.