On top of allowances and various tax-free savings options, the Inland Revenue allows individuals to earn up to pounds 6,300 a year in capital gains before imposing tax, and most people's investments come nowhere near producing that sort of growth.
Chris Wicks, of chartered accountants Kidsons Impey Scott Lang, says: "If you are happily married and your partner does not work, it may make sense to transfer some of your savings to your partner to maximise the benefit of both sets of income and capital gains allowances."
There are hundreds of savings products on the market, and the obvious temptation is to plump for those investments offering the biggest potential returns. However, maximum growth usually means maximum risk. So before you invest any of your money, get to grips with what each product offers. Make sure you read the small print, and if any aspect needs clarification, seek the help of an independent financial adviser.
The flipside is that the least risky investments - traditional bank and building society accounts - often offer the smallest returns. You are guaranteed to get your original money back, normally whenever you want it, but the quid pro quo is a low rate of interest. And as the Revenue regards interest as income, it is taxed at your highest rate.
The best instant access and postal accounts pay about 3.8 per cent net of basic-rate tax for deposits of pounds 100 or more. You can earn higher rates by agreeing to tie up your money for longer periods. For example, Scar- borough Building Society pays a net interest of 4.8 per cent to savers who give 75 days' notice of wanting their cash.
Tax-exempt special savings accounts (Tessas) tend to have the best rates of interest for sums of up to pounds 9,000. Birmingham Midshires building society and Cheltenham & Gloucester both offer 7.25 per cent tax-free on sums of pounds 1,000 plus. But again there is a tie: investors must leave their money untouched for five years to retain that tax-free status (although the equivalent of the net interest can normally be withdrawn in the meantime).
Nervous investors may also like the rock-solid returns of government- backed National Savings certificates, which are completely free of income and capital gains tax. The returns come at maturity, with reduced payouts for people who cash in their certificates early.
The growth in value of money put into National Savings index-linked certificates promises to equal the growth in inflation and to deliver a guaranteed extra sum of interest accrued on each anniversary of investment. That extra interest rises from 1 per cent of the original purchase price in the first year to 5.31 per cent of the value of the certificate in the fifth year.
Alternatively, the fixed-interest certificates earn 5.35 per cent tax- free provided the money is left invested for five years (making Tessas seem more attractive). The minimum initial purchase for both types of certificate is pounds 100, and they can be bought through your local post office.
The winnings from National Savings Premium Bonds are also tax free, and pounds 20m is paid out by Ernie the computer each month. But there is no guarantee you will win anything at all - let alone the top monthly prize of pounds 1m.
Investment in the stock market is more risky; the value of shares fluctuates all the time, and you are not guaranteed to get your original money back. But pooled investment funds spread your cash across a range of shares, diluting the risk of one company performing badly.
Unit trusts are probably the simplest and most flexible type of pooled investment. Each fund is divided into units of equal value, and these rise and fall in value according to the performance of the assets held by the fund. You can buy and sell units whenever you want.
Investment trusts also offer the benefits of a wide portfolio, but because they are structured as companies with shares of their own, there is slightly more risk. If demand for the trust's shares slackens, the share price will fall independently of the value of the trust's investments. However, this need only be a problem if you want to sell your shares before the price recovers.
Unit and investment trusts have money in every corner of the world and in every type of company. "People who want to stick towards the middle of the risk scale could invest in 'UK managed' or 'blue chip share' funds," says Mr Wicks. "These will produce average funds, but they are less likely to be volatile."
At the other end of the scale, "emerging markets" funds and those investing in a single foreign country can offer great scope for above-average returns, but they may also fluctuate rapidly in value. Likewise, funds that invest in a single business sector such as gold or technology are for the financially experienced investor.
People who are both wealthy and bold may want to consider investing directly in a company's shares rather than hedging their bets. If you get your selection right, it can greatly increase your gains. Choose a company that fails to perform, or worse still closes down, and you will be left nursing a loss.
Shareholders can limit risk by investing in blue chip stocks, which are less likely to go bust and should provide dividends that will grow over time. Privatisation shares are a good example of these. But if you want to go all out for growth, you could try the share tips from our panel of stockbrokers on page 19.Reuse content