Navigate Investment Income

Earning an income to support your lifestyle off the back of investments you have made is a goal for many people, but having the knowledge to be able to do so confidently is where the difficulty lies. 

Navigate Wealth can help you decipher the world of investments, enabling you to make the best possible decisions for your financial future. We are dedicated to offering sound advice that is easy to understand, and our expert team believes your interests are our priority. 

To find out more about investment income, or to arrange a free consultation, you can contact the Navigate Wealth team on 0345 340 9690 or use our submission form.

What is investment income? 

Investment income comes from interest payments, dividends and capital gains that are collected following the sale of assets, and any other profit made through an investment vehicle of any sort. 

Usually, most people earn the predominant portion of their net income through their employment. However, savings and investment in the financial markets can grow moderate savings into considerable earners. 

Income tax 

If you make money from your savings or investments, your tax bill is usually calculated depending on the type of products you hold and any other streams of income you have. You will only start paying tax once your income exceeds your personal income tax allowance, the personal savings allowance or the dividend allowance. 

Tax on savings income is paid at 20%, 40% and 45% (2018-19), depending on how much other income you have. On dividends from investments, it is paid at 7.5%, 32.5% or 38.1%. 

What types of savings and investment income are there? 

There are three main types of savings and investment income, on which you have to pay tax. These are income from savings, income from dividends and income from life insurance investments. 

Income from savings 

Savings income is the money you receive in the form of interest, rather than dividends. 

You are likely to accrue this type of interest on the following: 

  • National Savings & Investments products 
  • Bank or building society accounts 
  • Gilts 
  • Permanent interest-bearing shares 
  • Corporate bonds 
  • Local authority investments 
  • Unit trusts or open-ended investment companies 

Any annuities that you purchase separately and voluntarily are also included in this category. However, part of the income you receive is treated as a tax-free return of capital, meaning not all of your gains are taxable. 

Income from dividends 

Dividends income comes from: 

  • Shares you own in companies
  • Investment trusts 
  • Unit trusts and open-ended investment companies that mainly invest in shares 

Income from life insurance investments 

This is any income you earn from life insurance investments, such as with-profit and investment bonds. 

Contact us

Navigate Wealth is here to help you decipher the different types of investment income and which is best for you by offering clear, easy-to-understand advice that helps you to make the right decision about your financial future. 

To find out more about investment income, or to arrange a free consultation, you can contact the Navigate Wealth team on 0345 340 9690 or use our submission form.

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