Best way to invest £250k

dunstonh

Nice post CM

HR taxpayers in this situation probably amount to 1 in 25 of the population, and 1 in 5 of Dh's clients

Just ran my KPIs and bonds account for 15.7% of investment cases in this tax year. A drop on the previous year but I had more bonds placed in trust for estate planning that year. It would have been lower had it not been for a string of particulary large investments towards the end of last year. I would imagine Tiggs has a higher ratio of investment bonds on his books as he specialises in estate planning.

Trusts and estate planning accounts for a significant amount as well.

Chrismaths

Fair enough. We often use offshore bonds for trusts (they fit very nicely), but we've only ever done 2 for individuals, who were UHNW individuals, and then only with a small portion. Different strokes and all that.

EdInvestor

bonds account for 15.7% of investment cases in this tax year.

Is that by value or by volume?

Assuming 2 identical set of investments, and that the investor has pension income up to the age allowance threshold, and let

Ai = net dividend income
Ag = capital growth on equities
Bi = net interest income (from bonds, cash)

In what way would capital gains affect the age allowance?

dunstonh

Is that by value or by volume?

Volume. The higher the value, the more likely it will be bond.

Chrismaths

In what way would capital gains affect the age allowance?

It wouldn't (unless of course they were greater than the annual exemption). Have a closer read of my original post, the growth on equities only applies to the investment bond.

me_earlier wrote:

Then the tax payable if the client holds them directly is:

0.22*(Ai/1.8+Bi/1.6)

If they are held in an investment bond, then the tax payable is:

0.2*Ag

My post dealt with extra tax payable, over and above the usual 10% on divis, and 20% on interest for a BR taxpayer near the age allowance, comparing an onshore investment bond to holding things directly.

Can you please crowbar in some reference to PTRs? This thread has gone far enough without one. :rotfl:

EdInvestor

Chrismaths wrote:

My post dealt with extra tax payable, over and above the usual 10% on divis

There is usually no tax on divis payable by basic rate taxpayers, because it is covered by the tax credit.However if income from divis (after it's added on to other income) results in the person's total income exceeding the level (c.21k) which impacts the age allowance, then the age allowance may be reduced.


Divi income from ISAs and PEPs is not included in taxable income of course.

EdInvestor

dunstonh wrote:

Volume. The higher the value, the more likely it will be bond.

Thought as much.

And the bond percentage by value was......?

dunstonh

And the bond percentage by value was......?

Don't know. Its not a KPI so it isn't something I can press a button and get an immediate response. It doesn't really have any relevance either. You can have 100 people investing and 99 have 20k and the 10th has 2 mill. If 99 go into unit trust 1 goes in investment bond then value would indicate a small preference to bond. Yet only 1 case in 100 went that way.

You have no control over the amounts people wish to invest. You do have control over where it is invested though, hence why provider/product counts are monitored.

Chrismaths

There is usually no tax on divis payable by basic rate taxpayers, because it is covered by the tax credit.However if income from divis (after it's added on to other income) results in the person's total income exceeding the level (c.21k) which impacts the age allowance, then the age allowance may be reduced.

So can you tell me by how much the age allowance would be reduced if you received a net dividend of £900?

I'll give you a clue, for every £2 of income, the age allowance is reduced by £1.

empfun

Medium risk probably Buy-To-Let. But why don't go high risk and use it to start/fund a business. If people had that kind of means, they would too. It takes money to make money. :-)