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Using ISAs Alongside Your Company Pension: A Smart Tax Mix

  • Writer: JSC Accounting Team
    JSC Accounting Team
  • Oct 7
  • 2 min read

Saving for the future doesn’t stop at your pension. The UK’s Individual Savings Accounts (ISAs) remain one of the simplest and most flexible ways to grow wealth tax-free. When combined with a company pension, they form a powerful duo.


ISA earnings are tax free
ISA earnings are tax free

Why ISAs are so useful

An ISA lets you save or invest up to £20,000 per year (as of 2025/26) without paying any income tax, dividend tax, or capital-gains tax on the growth or withdrawals. You can withdraw money anytime, making ISAs more flexible than pensions, which are locked until at least age 55 (rising to 57 from 2028).


Types of ISA

  • Cash ISA: low-risk savings, similar to a regular account but with tax-free interest.

  • Stocks and Shares ISA: invests in funds, shares, or bonds, potential for higher growth, but with risk.

  • Lifetime ISA: for those under 40 saving for a first home or retirement; the government adds a 25% bonus up to £1,000 per year.


Balancing ISA and pension contributions

Your pension provides long-term growth with upfront tax relief. ISAs provide mid-term flexibility and tax-free withdrawals. For business owners, a balanced approach might look like this:

  • Let your company contribute to your pension for long-term savings.

  • Personally invest any extra income in ISAs to stay liquid and flexible.


When to use each

  • Use pensions for profits you don’t need soon, they give immediate tax relief and long-term security.

  • Use ISAs for funds you might need before retirement, like buying property, expanding your business, or creating an emergency buffer.


The simple takeaway

You don’t have to pick between pensions and ISAs, the smartest move is to use both. A pension reduces your tax now, and an ISA keeps your future income tax-free later. It’s the perfect mix for directors balancing flexibility and efficiency.


Need help making sense of your taxes? JSC Accounting works with small businesses across the UK to keep things simple and compliant. Get in touch for a friendly chat about how we can help.


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