I want to organize my investments to maximise the use of annual tax free allowances in the UK. Assume no income from employment, so Investment Ideas to maximise use of the Personal Allowance are invited. The following is what I believe we can utilize - but are there others?

  1. Personal Allowance: £12500
  2. Starting rate for saving (if other income £0): £5000
  3. Personal Savings Allowance: £1000
  4. Capital Gains Allowance: £12300
  5. Dividend Allowance: £2000

This is £32,800 so far.

Personal Allowance: I understand that interest from Bank/Savings accounts can make use of any unused Personal Allowance.

The Income from Investment Loans such as Peer to Peer lending is treated as Interest so can also make use of any unused Personal Allowance. A possible strategy is once you have used up your CGT allowance - perhaps divert some investments into Peer To Peer lending platforms.

You do not pay tax on any dividend income that falls within your Personal Allowance. So, if you plan on using up all your CGT allowance, it may be sensible to structure your investments to invest in dividend paying ones (Income shares rather than Accumulation ones) to use up the unused Personal Allowance.

Any other investments to utilise unused Personal Allowance?

In addition, you can make use of the following:

  1. ISA investment £20,000 per year - gains free of income and capital gains tax.
  2. Pension Contribution for no earnings of £2880 - to get £720 of tax relief.
  3. Premium Bonds - allowed to invest up to £50,000 - and all income is tax free and does not affect your Personal Savings Allowance. With average luck this currently will only generate a 1% return.
  4. Investing in UK legal tender coins (gold, silver, platinum) is exempt from CGT in the UK, meaning that coins such as The Sovereign, Britannia, Lunar and Queen's Beasts do not attract the tax in the UK.

Any others?

Note: Any Capital Gains over the annual Capital Gains allowance may not make use of any unused Personal Allowance to reduce the tax burden. It may be worth considering realizing the CGT allowance in 1 tax year, and then realize any extra gain in a subsequent tax year.

Is there any tax free income boosting benefit to using Dividend generating investment stocks instead of growth stocks which are Capital Gains generating? See answer below - the current tax regime gives a benefit to Growth stocks - assuming you have made use of Dividend stocks to utilise any unused Personal Allowance.


  • 1
    I assuem from what you say that you have no employment income? Commented Feb 11, 2021 at 14:07
  • 1
    "I want to organize my investments" - existing capital, or ongoing savings? And either way, how much?
    – AakashM
    Commented Feb 11, 2021 at 14:17
  • 1
    Do you insist on tax-free income, or do you want to maximize your after-tax income?
    – jamesqf
    Commented Feb 11, 2021 at 19:05
  • @gs-apologise-to-monica : Assume no employment income - the object being to maximise investment to use up your Personal Allowance. User aakashm :From an existing capital basis. To keep the question general - if you have tax-free income ideas that only work for a given investment range - then please list them with the range you have in mind. User jamesqf - yes tax-free income only. I will update the question to clarify your points and add additional sources of tax-free income e.g. Premium Bonds.
    – john blair
    Commented Feb 13, 2021 at 12:28

1 Answer 1


There are other things which might be useful...

  • Private residence relief. All the gains on your personal residence are CGT exempt. So someone thinking long term might buy a bigger house than they need, planning to downsize later. The gains would be tax-free.

  • You can earn £7,500 tax-free from "rent-a-room relief" from letting out furnished accommodation in your home. (Which would appear to have potential synergies with private residence relief.)

  • The whole world of entrepreneurs' tax reliefs: VCTs and EIS/SEIS investing. I don't know enough about this to comment further. It has a reputation for being complicated and expensive, but it does seem to be useful to high earners.

  • Certain gold/silver coins are CGT exempt, because they are considered British legal tender. (Examples at https://www.bullionbypost.co.uk/capital-gains-tax-free-gold-coins/ ).

Re the growth stocks vs. dividend stocks thing: given a choice between taxable investments which will grow capital value and investments which will provide income but which are otherwise equivalent, assuming all relevant reliefs have been used up the rational tax-reducing choice would be to prefer the capital growth as gains are currently taxed at a lower rate - 10/20% on gains (18/28% for property gains) vs 20/40/45% for income. However there seems to be a lot of speculation that the chancellor may increase CGT rates and/or lower CGT thresholds soon.

  • 1
    An excellent answer. I wasn't aware of the Legal Tender investment in Gold, Silver, and Platinum coins. Great tax insight into the growth vs dividend stocks. Thanks!
    – john blair
    Commented Feb 13, 2021 at 12:36

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