INFORMATION about
investing with coutts


Find out more about our Coutts Invest Pension and ISA service.

You must be over the age of 18 and under the age of 75 and be a UK resident for tax purposes. You cannot access your pension benefits before the age of 55. The value of investments can fall as well as rise, and you may not get back the full amount you invest. Eligibility criteria, fees and charges apply. When transferring any existing pensions, exit fees may apply.

Different ways to invest with Coutts invest

Coutts Invest lets you invest directly into a fund using a general investment account (or GIA) or take advantage of the tax reliefs offered by an Individual Savings Account (ISA) or a pension plan (our Coutts Invest Pension) or both. Which route is right for you will depend on your personal circumstances including how much of your annual ISA and pension contribution allowances you have used.

The following is a high level guide on the tax situation of each of these ways of investing.

. Personal Pension Stocks and Shares Individual Savings Account (ISA) General Investment Account (GIA)
Money In

Basic rate tax is added to your personal pension.  Under current tax law, this effectively increases your contribution by 25%.

For example, if you pay a lump sum of £3,000 into your pension, £750 will be reclaimed from HMRC on your behalf, giving you a total contribution of £3,750.

If you pay tax above the basic rate band you may be able to claim further tax relief.

The amount of tax relief available is dependent on your level of income and available Annual Allowance.

 

Find out more about investing in pensions

No tax relief.

Contributions are limited to your Annual ISA Allowance, currently £20,000 a year.

No tax relief.

No limit on how much you can invest.
Fund

Your investment fund grows free of UK income tax and capital gains tax.

Certain foreign investments may be subject to foreign taxes.

Your investment grows free of UK income tax and capital gains tax.

Certain foreign investments may be subject to foreign taxes even when held in an ISA.

The Personal Portfolio Funds are Offshore Reporting Funds for UK tax purposes.

You may be subject to tax in income earned by the fund.

Capital gains on investments held by the fund are not subject to UK capital gains tax.
Money Out

Benefits can only be taken after age 55 (expected to rise to 57 in 2028).

Up to 25% of your pension pot may be taken as a tax free lump sum. You can take more than 25% as cash if you want to, but anything over the tax-free allowance will usually be subject to tax.

You don’t pay tax on amounts used to buy an income through an annuity. However, the income from the annuity will be liable for income tax.

Drawdown income will also be liable to income tax.

Benefits can be accessed flexibly to help mitigate your potential income tax liability.

(Please note that you will have to transfer your Coutts Invest pension pot to another provider in order to start taking your pension benefits.)

You may face additional tax charges if you exceed the Lifetime Allowance on the value of your pension benefits.

You can take the money from your ISA at any time and pay no UK income tax or capital gains tax.

There is no lifetime limit on the value of your ISA holdings.

You can take your money out at any time.

Gains on the sale of your shares in the fund in excess of your tax free allowance may be subject to UK capital gains tax.

There are no limits on how much you can invest through a GIA

investing in pensions

What is a pension and why would you want one?

 

  • WHAT IS A PENSION PLAN?

    A pension plan is a tax-efficient investment plan to help you save money for later in life. People typically use their pension savings to replace their working income as they retire, but you don’t have to do this and can even take your pension before you retire from work.  

    There are two types of pension:

    • defined benefit scheme - pension benefits are defined in the pension scheme rules rather than being based on contributions and investment returns
    • defined contribution scheme - you build up a pension pot from contributions paid in and benefits are based on the size of your pension pot

    The Coutts Invest Pension is a defined contribution scheme.  You decide how much you would like to pay into your pension pot and build up a pot of assets over time that you can access after you turn 55 (expected to be 57 by 2028).

    You can take up to 25% of your pot as a tax-free lump sum (usually capped at £268,275), and use the rest in various ways including:

    • use some or all of your pot to buy a guaranteed income through an annuity
    • use some or all of your pot to draw benefits while remaining invested in the pension plan (known as flexi-access drawdown)

    The Coutts Invest Pension allows you to either:

    • withdraw all your pension savings as a one-off payment. Some will be tax free. The rest may be taxable depending on your circumstances, or
    • use the money to take a tax-free one-off lump sum with anything left used to buy an annuity.

    If you want to take money out of your pension in a different way, for example through flex-access drawdown, you will need to transfer your pension to another scheme at that time.

  • WHY SAVE THROUGH A PENSION SCHEME?

    Even if you think you will have enough money later in life, it can still make sense to save through a pension scheme. There are specific advantages to pensions that can help you make the most of your money.

    1. Tax relief on your contributions

    One of the key advantages to saving money in a pension scheme is the tax relief you receive on contributions.

    Generally, basic rate tax should be added by the scheme provider to contributions paid into a personal pension. If you pay above the basic rate band, you may be able to claim further tax relief through your Self Assessment Tax Return. This will reduce your overall tax liability rather than be added to your contributions.

    If you are a higher rate taxpayer you can apply to have your tax code adjusted rather than reclaim tax through your Self Assessment.

    There are limits on the level of contributions that attract tax relief.  For most people this will be your relevant UK earnings each year, with a cap at the Annual Allowance, which is currently £60,000.

    There are some factors that can affect the Annual Allowance – for example, people with annual taxable income over £200,000 and people who have already taken certain benefits from a pension.

    But even with these limits, the tax relief for pension contributions makes them an efficient way to save.

    2. Tax-efficient investment

    Once contributions to your pension scheme are invested, they’ll potentially grow largely free of taxes until you decide to draw your retirement benefits. The tax treatment of pension funds means that they should grow faster than equivalent taxable funds.

    3. Tax free lump sum

    When you decide you want to take your pension benefits, current rules allow you to take up to 25% of your pension pot as a tax-free lump sum (usually capped at £268,275). Compare this to an ISA, which allows you to take 100% of the fund tax free, but you don’t get the tax relief on your contributions (with the exception of Lifetime ISAs).

    Investing outside of a pension or ISA means you may have to pay income tax on any dividends and capital gains tax when you cash your investments in.

  • HOW MUCH SHOULD I PAY INTO MY PENSION?

    Pensions should be understood in the context of the rest of your financial planning. You should think about how much you can afford to contribute regularly, while taking into account your age – you can’t take money out of your pension scheme until you’re 55 (this is expected to rise to 57 in 2028), and many of the benefits of adding further contributions to a pension plan are withdrawn after you turn 75.

    You should also think about any existing pension savings you have and how close you are to your Annual Allowance.

    The Coutts Invest Pension can only accept contributions from your own personal account.  It cannot accept employer or third party contributions.

  • WHAT ARE THE INVESTMENT OPTIONS IN A COUTTS INVEST PENSION?

    Coutts Invest Pension lets you invest your pension pot in one of five Personal Portfolio Funds. Some investors are looking for a more dependable return that just protects the spending power of their money. Others are willing to accept less certainty and a greater possibility of losing money for a chance of higher growth. Our range of five funds aims to provide an option to suit your preferences.

    You should keep your plan under regular review to ensure it continues to be right for you. The level of risk you are prepared to take with your investment may change over time.

     

  • CAN I MAKE WITHDRAWALS FROM MY COUTTS INVEST PENSION?

    You can’t withdraw money from a pension until you are 55.  This is expected to increase to 57 from 2028.  There are also limits on how you can withdraw money from a pension.

    The Coutts Invest Pension allows you to either:

    • withdraw all your pension savings as a one-off payment. Some will be tax free. The rest may be taxable depending on your circumstances, or
    • use the money to take a tax-free one-off lump sum with anything left used to buy an annuity.

    If you want to take money out of your pension in a different way, for example through flexi-access drawdown, you will need to transfer your pension to another scheme at that time.

  • WHEN CAN I START TAKING BENEFITS FROM MY PENSION?

    You can start taking your pension benefits from age 55 (this is due to increase to age 57 in 2028). You don’t have to stop working in order to take your benefits.

  • HOW CAN I TAKE MY PENSION BENEFITS?

    Your options may include:

    • Take it as cash – you can take up to 25% of your pension pot tax-free and pay tax at your marginal rate on any cash you take above this amount
    • Use some or all of your pot to buy a guaranteed income, called an annuity
    • Use some or all of your pot to draw benefits whilst remaining invested in the pension plan (known as flexi-access drawdown)

    You can choose some or all of the above options, whatever suits you.

    How you choose to take your pension benefits will be a very important decision.  You may find it helpful at that time to seek guidance or advice. As well as talking to your private banker, you can get free, impartial guidance to help you understand your options from the government's Pension Wise service online at www.pensionwise.gov.uk, over the telephone on 0800 138 3944 or face-to-face.

    The Coutts Invest Pension allows you to either:

    • withdraw all your pension savings as a one-off payment. Some will be tax free. The rest may be taxable depending on your circumstances, or
    • use the money to take a tax-free one-off lump sum with anything left used to buy an annuity.

    If you want to take money out of your pension in a different way, for example through flexi-access drawdown, you will need to transfer your pension to another scheme at that time.

  • WHAT HAPPENS IF I DIE BEFORE I START TAKING BENEFITS FROM MY PENSION?

    If you have any pension savings remaining in your personal pension on your death this will usually be paid to your nominated beneficiaries. If you die under the age of 75, your pensions can typically be paid out free of income tax.  However, if the amount is more than the ‘lump sum and death benefit allowance’, the amount over this allowance will be taxed at the beneficiaries’ marginal rate of income tax.  For the 2024/25 tax year this allowance is £1,073,100. (Depending on your situation you may have an allowance higher or lower than this).  If you die aged 75 or older, your pension will be subject to an income tax charge on the person who receives them.

    Inheritance tax will not normally be due when you pass on your pension savings. This is because, unlike other investments, your pension isn’t normally part of your taxable estate.

    You may however be subject to inheritance tax on any payments or transfers if you never intend to take your pension benefits before you die.

    When you open your Coutts Invest Personal Pension Account, or at any time after, you can nominate who you wish to benefit from your pension when you die.

As we do not provide tax advice, you should seek independent tax advice as required.  The comments provided above are based on our understanding of current tax law which applies to UK resident and domiciled individuals not subject to tax elsewhere.  Tax law is subject to change, including with possible retrospective effect.  The availability and value of any tax reliefs will depend on your personal circumstances.

As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. The information in this article should not be regarded as financial advice.

Transferring your pension

It might be a good idea to transfer your pension to Coutts.

 

Keeping all your pension savings in one place can make it easier to keep track of how much you have saved for your pension. Transferring to the Coutts Invest Pension will also mean that you benefit from our in-house investment expertise, with each of the five funds invested in a diversified portfolio of assets, in a transparent and low-cost manner.

Making a transfer is usually very simple. You’ll just have to let us know which providers you have pension pots with and we will contact them to arrange the transfer. Normally, within a few days the money will be transferred to your Coutts Invest Pension. Although in some cases this may take a little longer.

Your current provider may ask you to sign a letter or fill in a form. In addition, while Coutts Invest won’t charge you for transfers, your current provider may have an exit charge. If you’re uncertain, you should get in touch with your provider.

Before deciding on whether to transfer it is always a good idea to check whether any of your existing pension plans have benefits or features which are important to you as these may be lost on transfer.  Examples of benefits or features which an existing plan may have are:

  • Guaranteed Annuity Rates (GARs)
  • Waiver of Premium Benefit (WOPB)
  • Some form of guaranteed rate of return on your investment or minimum level of income in retirement
  • Tax-free cash in excess of the standard 25% of the value of your fund at retirement
  • A protected retirement age where you are allowed to take retirement benefits before age 55

It’s important that you find out if the above features and benefits or any other valuable benefits are attached to your existing pension plans before deciding whether to transfer them to the Coutts Invest Pension as these features will be lost when you transfer.

Please also note that if you decide to go ahead with a transfer there will be a period whilst the transfer of funds is completed where you will not be invested.  The investment markets could rise or fall during this time and there is the possibility that you won’t benefit from gains made in the investment markets whilst you are not invested.

We are unable to accept the transfer of defined benefit (often known as final salary) pensions. If you are considering transferring from a defined benefit scheme you may wish to seek independent financial advice.

HMRC may regard a pension transfer as a chargeable lifetime transfer subject to inheritance tax if you are in serious ill health and die within two years.

individual savings account (ISA)

Individual Savings Accounts are another tax efficient way of investing in Coutts Invest.

 

  • What are individual savings accounts?

    Individual Savings Accounts – commonly called ‘ISAs’ – are a tax-efficient way of saving and investing. They are a ‘wrapper’ that separates off a proportion of money you save to protect the returns from UK income tax and capital gains tax.

    ISAs are provided by financial institutions such as banks, buildings societies or investment providers.

    There is a limit to how much you can put aside in this way each year, known as the annual ISA allowance. The annual ISA allowance for the 2019/20 tax year is £20,000.

    There is more than one type of ISA. You can put your money in one type of ISA or divide it between a combination of the different types below if you want to.

     

    Cash ISA

    This is like a deposit account, but you don’t pay tax on interest earned.

     

    Stocks and shares ISA

    Allows you to invest up to the annual ISA allowance in stocks and shares, including investment funds. You won’t pay UK income tax on income you get from the assets held in a stocks and shares ISA – such as dividends or interest payments – and you won’t pay UK capital gains tax on any gains you make when you sell the assets.

    Certain foreign investments may be subject to foreign taxes even when held in an ISA.

     

    Help to Buy: ISA

    Help to Buy: ISA is a type of cash ISA. It’s for first time buyers of UK properties. You can save towards your first home using a Help to Buy: ISA and the government will boost your savings by 25% when you come to buy your house, up to a maximum of £3,000.  There are specific criteria you must meet and rules around how these ISAs work.

     

    Innovative finance ISAs

    Innovative finance ISAs allow you to access peer-to-peer lending in an ISA wrapper and receive tax-free interest.

     

    Lifetime ISA

    If you’re between 18 and 39 years old, you can take out a Lifetime ISA which offers a flexible way to save for your first home and later life, with a 25% boost on your contributions from the government.  There are specific criteria you must meet and rules around how these ISAs work.

     

    Flexible ISAs

    A flexible ISA isn’t a type of ISA in its own right, but is an extra functionality that can be applied to a cash or stocks and shares ISA. This lets you withdraw money from your ISA at any time then return it in the same tax year without affecting your allowance. Flexible ISA functionality only applies to cash ISAs and cash held in a stocks and shares or an innovative finance ISA where the ISA terms and conditions allow it.

  • What type of ISA is available through Coutts Invest?

    Coutts Invest offers a stocks and shares ISA. What sets a stocks and shares ISA apart from other investment accounts is that any growth in the value of your investment is free from UK income and capital gains tax, and you don't have to declare ISAs on your tax return. Because of their tax benefits, ISAs can help your investment grow faster over time.

    If you have existing ISAs, you can transfer them to Coutts Invest without affecting their tax-free status. You can transfer ISA balances in part or in full, except for current year ISA balances which must be transferred in full.

    The value of investments and the income from them can fall as well as rise and you may not get back the full amount you invested.

    As we do not provide tax advice, you should seek independent tax advice as required.  The comments provided above are based on our understanding of current tax law which applies to UK resident and domiciled individuals not subject to tax elsewhere.  Tax law is subject to change, including with possible retrospective effect.  The availability and value of any tax reliefs will depend on your personal circumstances.

     

    Find out more about investing in a Coutts Invest ISA

     

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Become a client

When you become a client of Coutts, you join a network of exceptional people. Get in touch online or call +44 (0)20 7957 2424 to find out more about our services.

Already a client?

Contact your private banker at any time or call +44 (0)20 7957 2424 for more information.

 

All calls with Coutts are recorded for training and monitoring purposes.

All calls with Coutts are recorded for training and monitoring purposes.