Pension vs S&S ISA

[ShipwreckSunset]

can I check something here?
I am a 40% tax payer, putting 12% into company pension and company puts in 10%. I’m thinking of upping it is a little, at least 2% when NI reversal takes place. Am I right in thinking it makes more sense to invest in S&S via pension rather than isa due to the tax saving? Even if it doesn’t grow particularly, presumably I will still benefit from the tax saving going in.

I know there are issues around accessing pension vs an isa, and I aim to put more in cash isas at a later date, but seems like s&s I vestment would be better to do via pension rather than isa?
Thanks.

You’re correct. As a higher rate tax payer you get more relief going in, assuming that in withdrawal you’re back to being basic rate tax payer you net gain. As you say, the thing to watch out for is access age.

If you pay the same into a pension and an ISA for the same period and then withdraw from both at the same rate, the PENSION will always win.

Only ‘trap’ what you can afford to leave invested, but yes long term, a pension wins.

Thanks both, very helpful.
I will up contribution by 2% next month, then further couple of % pts as and when I can afford, aim to get to 20%.

You’re paying no tax on the money going into your pension. Whereas your ISA will be money you’ve had to pay tax on. So the answer is pretty straightforward - the pension is more tax efficient.

You will pay income tax when you draw that pension as income, but very few pensioners will be higher rate (40%) taxpayers so you’ll likely pay a lower tax rate.

Depending on you salary level, also keep an eye on your Annual Allowance (generally £40k pa) and your Lifetime Allowance (LTA).

Isa's are taxed on the way in .
Pensions taxes on the way out .
There is a place for both but as previous posters state there is greater growth in pensions due to the HMRC contribution.

How old are you?

Sadly I’m a long way off the LTA or £40k pa @Chewbecca 😉
I’m late forties.

A pension is almost always the better option, even after being taxed on drawdown you still have at least 5% uplift.

UFPLS means you can get over £16k a year out tax free (assuming no other income) so it’s ideal for tax efficient early retirement before State pension kicks in.

@ShipwreckSunset ah ok. I was going to suggest the under 40's lifetime isa