R85 form - income tax question

AirlieBird

quatro wrote: »

I will soon have £30k in heritance money. This will mean that I no longer qualify for pension credit as my savings will be over the £16k limit.

There is no upper limit for pension credit, although it will be reduced by £1 for every £500 or part thereof - i.e. for £30k your pension credit will be reduced by £60.

trashcan_2

Should he fill in the R85 form if he receives the extra money?
He might be able to receive it now but when the extra £50k comes in, the interest of that will put him well over the limit. So should he cancel the R85 form when he receives this extra £50000 or at the end of the tax year when the interest comes in.

jamesd

It's definitely not in your interest to put money in accounts that don't earn interest.

You could consider placing up to 25k at Zopa, since interest rates after bad debt allowance and fee available there are often significantly greater than savings accounts. Do note that the money is lent to individual consumers and there is no FSCS protection at any time, nor any guarantee that returns will be as good as they could be. Returns available differe depending on time of year and money available (now is expected to be a time when new lending gets relatively low rates, the beginning of a year and March/April a time of relatively high rates).

You could also consider making pension contributions since you get 20% tax rebate on 3600 gross contributions even if you're not paying any tax. Then after a few years you can use the pension pot to take a lump sum and draw an income in a variety of ways.

You should use your full 3600 cash ISA allowance each year and investigate low volatility/risk options to use the 3600 remaining in the stocks and share ISA allowance, which includes option to invest in very safe things like UK government bond funds.

For savings accounts, pay particular attention to regular saver accounts, since those often offer rates higher than standard accounts.

To avoid gradual loss of income to inflation you'll need to have some equity investments, best placed in the pension or S&S ISA parts.