ING To Increase

lisyloo

I dont know how to get round tax issues legally.

There are several options which I can mention, but apart from not being qualified to give advice, I don't know your tax or employment status, so please take these as just potential options.

1) ISAs - up to £3K per individual in cash or £7K in shares. Double it up if you are married.

2) Annualy CGT allowance. You have an £8200 Capital Gains tax allowance (again this is each), so you can make £8.2K worth of profits on shares that you sell each year without paying tax. Note we are talking about real profits i.e. you sell the shares and not paper profits.

3) Premium bonds. You pay no tax on winnings. Prize fund return is fairly poor though at about 2.4% (last time I looked so could be out of date).

4) National savings. Worth having a look at their website. They do some tax free investments.

5) Property. My own opinion is that right now is a bad time to invest in property as the market is just about peaking. However there is no capital gains tax on your own home, so having a large home can work out as a good investment. Obviously you need to take into account the kind of property you want to live in as well.

lisyloo

6) Pensions - can't believe I forgot them.
Again I don't know your situation so I'm spekaing generally.
When you put contributions into a pension you get tax relief on your contributions.
When you take the money out, you can take a tax free lump sum.
The remainder has to be taken as income (an annuity).

The advantages are firstly the lump sum and secondly your income tax rate may be lower in retirement e.g. contributions get 40% tax relief but payments are only taxed at 22%.

There are a variety of funds you can invest in via a pension e.g. cash, so it doesn't have to be risky. It doesn't have to be shares.

home_alone

Lisyloo, I took early retirement and have 2 pensions soon 3, I sold all my shares (waste of time unless long term)most of the options you mention are small and in most cases need a 5 year term to materialize and I did say I wanted no fuss (Im a insurance salesman nightmare). I own my own property which if I scale down will give me more cash. I was going to buy a holiday home in Florida but who likes hurricanes.

Best % interest with instant access thats me.

gary

Bleg

Looks as if you have investigated all the angles. Good Luck.Hurriacnes!!!!!!!! can happen anywhere. If its not them it could be something else. As long as it feels good then bite the bullet.

DiggingOut

You might be able to get a great deal on some properties in Florida right now.

Something you might want to consider, gary. You want to keep your money available because of your age, but since you have pensions already, do you need to keep all of it available?

You could probably do something that would lock up 1/3 of it for 5 years (maybe a guaranteed equity bond or something). From what you have said, it sounds like you have no real plans that would cause you to need more than 2/3 of your money over the next five years.

You are retired, so I assume you have some time. Why not spend a little bit of time educating yourself on investments?

Also, if you have kids, you really should consider some serious inheritance tax planning, if this hasn't already been done. You might do well to use a little bit of that cash to pay for some advice, both on investments and IHT. But educate yourself a little bit first, so you know enough to recognise the difference between good advice and a salesman pushing a product at you.

home_alone

Thanks boys for the advice.
Diggingout, My kids are panicing about the inheritance tax they already have me and the wife (in their minds) on our way to a home with everthing signed over, but I admit its a big problem, all the advice so far is being eroded by the goverment, my only choice (I think) is to look at the 7 year clause and hand nearly all over now, dont really want to do that just yet.

thanks again gary

lisyloo

they already have me and the wife (in their minds) on our way to a home with everthing signed over, but I admit its a big problem, all the advice so far is being eroded by the goverment, my only choice (I think) is to look at the 7 year clause and hand nearly all over now, dont really want to do that just yet.

gary - I think you are mixing up 2 different things here - long term care and inheritance tax.

As far as inheritance tax goes, you can give away as much as you like and there is no tax if you don't die for 7 years (sliding scale if you do).

Long term care is however a different matter.
It is illegal to deliberately deprive yourself of assets to get benefits and the local authorities can look back decades.
It is therefore impossible to give away large amounts of money or houses (cos they'll get spotted).
I suspect that you can subtley dispose of small amounts e.g. large Xmas presents, but not 6 figure sums.
Another thing to consider is - do you really want to make yourself reliant on benefits.
This would mean having no choice of care home, possibly being in one miles away from friends and family and possibly even being split up from a spouse.
Not ideal in my view.

One option that you could consider is getting long term care insurance.
Basically you pay a lump sum (probably quite large) for insurance that will pay for any long term care you need.
The younger you are when you buy it, the cheaper it is (as there is more chance you'll die young and not use it).

The advantage of this is that it means you can still get the benefits of private care but also have money left over for your kids to inherit as it's all paid for.

You certainly should not be under the impression that it's easy to dump your assets and get free long term care.
The local authorities look into this and you won't be able to give away of house - they can overturn that many years (even decades) later.

Yorkieds

Lisyloo

The remainder to be taken as income, but necessarily an annuity.

ie Income drawdown.

YDS

lisyloo

The remainder to be taken as income, but necessarily an annuity.

I think you might have intended to put a NOT in there.

My understanding is that you have to take an annuity by age 75. Has this changed?

Could you just clarify what income drawdown is please.

I don't think it would affect the fact that you would still have to pay income tax, which I think was the point that I was making.

Yorkieds

Apologies, must check carefully before posting.

Income can be from,

Benefits from a group pension scheme.
Annuity from an Insurance company.
Income drawdown.
(on income drawdown the requirement to purchase an annuity at 75 will be removed from April 2006)

Income drawdown allows you to take an income (currently based on published Annuity values) ie maximum down to 35% of that figure.

The new rules allow for income draw down to be from as little as £1 per annum upto 120% of the published Annuity values.

You pay income tax at the rate relative to the income.
YDS