Reference guide
Tax-Sheltered Vehicles Explained: UK, US, and Canada
The UK, US, and Canada each give employees a different set of tax-advantaged accounts to use. The labels differ, but the underlying mechanics fall into three families: pre-tax in and taxed out, post-tax in and tax-free out, and the rare triple tax-advantaged account. This page compares all of them in one table and links to deeper guides for each. Figures are HMRC, IRS, and CRA 2026 limits.
The complete comparison table
| Vehicle | Country | Tax on contribution | Tax on growth | Tax on withdrawal | 2026 annual limit | Liquidity |
|---|---|---|---|---|---|---|
| Workplace pension (salary sacrifice) | UK | Pre-tax, no income tax or NI | Tax-free | 25% tax-free lump, rest as income | £60,000 annual allowance | Locked until age 55 (57 from 2028) |
| SIPP / personal pension | UK | Pre-tax via relief at source | Tax-free | 25% tax-free lump, rest as income | £60,000 annual allowance | Locked until age 55 (57 from 2028) |
| Stocks and Shares ISA | UK | Post-tax | Tax-free | Tax-free | £20,000 | Withdraw any time |
| Lifetime ISA | UK | Post-tax with 25% government bonus | Tax-free | Tax-free for first home or age 60+ | £4,000 (inside £20,000 ISA) | 25% penalty otherwise |
| Traditional 401(k) | US | Pre-tax federal income tax | Tax-deferred | Taxed as ordinary income | $24,500 employee deferral | 10% penalty before age 59½ |
| Roth 401(k) | US | Post-tax | Tax-free | Tax-free after 59½ and 5-year rule | $24,500 employee deferral (shared with 401k) | 10% penalty before age 59½ |
| Traditional IRA | US | Pre-tax (deduction phases out) | Tax-deferred | Taxed as ordinary income | $7,500 ($8,500 if 50+) | 10% penalty before age 59½ |
| Roth IRA | US | Post-tax | Tax-free | Tax-free after 59½ and 5-year rule | $7,500 ($8,500 if 50+) | Original contributions any time |
| HSA | US | Pre-tax including FICA | Tax-free | Tax-free for qualified medical | $4,400 individual / $8,750 family | 20% penalty before 65 (non-medical) |
| 529 plan | US | Post-tax federal, often state deductible | Tax-free | Tax-free for qualified education | No federal limit; state lifetime caps | Earnings taxed plus 10% otherwise |
| RRSP | Canada | Deductible from taxable income | Tax-deferred | Taxed as ordinary income | 18% of earned income, max $33,810 | Withdrawals taxable, room not restored |
| TFSA | Canada | Post-tax | Tax-free | Tax-free | $7,000 ($109,000 cumulative since 2009) | Withdraw any time, room restored next year |
| FHSA | Canada | Deductible from taxable income | Tax-free | Tax-free for first home purchase | $8,000 ($40,000 lifetime) | 15-year window or move to RRSP |
| RESP | Canada | Post-tax with CESG match | Tax-deferred | Earnings taxed in student's hands | $50,000 lifetime per beneficiary | Unused grants returned to CRA |
The shaded HSA row is the only account that is tax-advantaged on all three legs at once. Every other account picks two of the three.
UK accounts at a glance
HMRC offers two tax wrappers that cover most employee saving. Pensions, whether accessed through workplace salary sacrifice or a Self-Invested Personal Pension, give full income tax relief on contributions and tax-free growth, but tax 75% of the withdrawal as income from age 55. ISAs are funded with post-tax money but never tax growth or withdrawals again.
Higher-rate and additional-rate taxpayers usually start with pension contributions where the marginal relief is largest, then use ISA room for liquidity. Basic-rate taxpayers often flip the order because the ISA gives the same tax outcome with full access. Salary sacrifice adds a National Insurance saving on top of income tax relief, which is why it is the default starting point in the UK calculator.
For a step-by-step walkthrough of the mechanic and example numbers at £50,000 and £80,000, read the salary sacrifice explainer.
US accounts at a glance
The IRS offers the widest set of vehicles. Employer plans dominate by capacity: a Traditional or Roth 401(k) allows a $24,500 employee deferral plus the employer match and aggregate limit of $72,000. The IRA family adds $7,500 of personal contribution. The HSA adds another $4,400 or $8,750, and the 529 plan provides an uncapped vehicle for education.
The typical priority order is 401(k) to full match, then HSA, then Roth IRA, then back to the 401(k). The two deepest comparisons are 401(k) vs Roth IRA and the HSA triple tax advantage.
Canadian accounts at a glance
The CRA gives Canadians three mainstream registered accounts, each aimed at a different goal. The RRSP is the retirement workhorse for higher-bracket earners. The TFSA is the flexible account for goals at any horizon and for lower-bracket savers. The FHSA, introduced in 2023, combines RRSP-style deductions with TFSA-style tax-free withdrawals for a first home purchase. RESPs cover children's education with a 20% Canada Education Savings Grant match up to $500 per year.
For the trade-off between the two largest accounts, read the RRSP vs TFSA comparison.
Cross-country parallels
- Pre-tax retirement: UK pension, US Traditional 401(k) / IRA, Canadian RRSP.
- Post-tax flexible: UK Stocks and Shares ISA, US Roth IRA, Canadian TFSA.
- First-home accounts: UK Lifetime ISA, Canadian FHSA. The US uses the Roth IRA $10,000 first-home exception instead.
- Triple tax (only the US has one): HSA.
Within each country, the right order is driven by your marginal tax rate today, your expected rate in retirement, and how soon you might need the money. The calculator does that math for you and presents a ranked vehicle list.
Get a personalized vehicle stack
Pick your country and the calculator applies the right limits, brackets, and withdrawal rules to your salary. The output is a priority-ordered list of accounts, the dollar or pound amount to put into each, and the tax saved.