What trade can advise me?

gadgetmind

The problem here is that a decent slug of equities alongside bonds and some cash makes sense for someone in their 70s but very few IFAs would want to advise this because of the risk of being accused of miselling.

Nevertheless, this approach can generate a steady stream of tax efficient dividend income while leaving some assets left to pass on.

As for gifts, there are lots of guides such as this one.

http://www.hmrc.gov.uk/inheritancetax/pass-money-property/exempt-gifts.htm

However, if she going to go over the IHT allowances?

LCK73

Pension income 8k, interest from capital 4.5k but most of the interest isn't in isa's as she inherited them from my recently bereaved father, hence the new income tax liability situation. Yes, if she needs to pay tax she would but you show me someone who wouldn't want to take a little care in order to minimise their liability which is why I'm on a mission to minimise her exposure to income tax and maybe make her capital work a little harder. Thanks for all the helpful replies about why IFA might not be interested or cautious...interesting. Sounds like we might be stuck with what we have in terms of returns on capitol as she can't afford to go risky.

LCK73

Iht won't be a factor as the house isn't worth that much.

gadgetmind

How much pa would she like from that £140k?

Does she want to pass any of it on or might she consider an annuity?

At her age, an annuity is good value but the capital dies with her.

Alternatively, she can invest the money, get 3% to 4% pa in tax efficient dividend income (rising roughly with inflation) but capital values will swing around with the markets.

colsten

She has her personal allowance plus an allowance for interest from savings, on which I think she currently might have to pay 10% interest. IIRC, from next April, she is allowed GBP 15,000 before she has to pay any tax at all.

The precise details are on the HMRC website. Sorry, I still can't post any links, perhaps someone else can?

jem16

LCK73 wrote: »

Pension income 8k, interest from capital 4.5k

That is a total of £12,500 at most.

Being 71 she has a Personal Allowance of £10,660 so only £1840 will be liable to interest and only charged at 10% as she is eligible for that. So £184pa in tax.

From April 2015, the 10% tax rate for savings will be abolished. Instead the first £5k of savings would be tax free. With her expected Personal Allowance of £10,660 from April 2015 this would mean £15,660 would be tax free for your Mum.

So really it's only this tax year you probably need to worry about with regards to tax.

http://www.scottishwidows.co.uk/extranet/literature/doc/FP53811

LCK73

Jem16, if this is indeed the case I'm worrying about nothing! I thought she would be liable for 20% of about everything over 10.6k. I know £500-600 might not sound as lot but it is when you are a pensioner with fixed income and escalating bills due to utility increases etc. Thank you!

jem16

LCK73 wrote: »

Jem16, if this is indeed the case I'm worrying about nothing! I thought she would be liable for 20% of about everything over 10.6k. I know £500-600 might not sound as lot but it is when you are a pensioner with fixed income and escalating bills due to utility increases etc. Thank you!

Just make sure your Mum, with your help if necessary, claims a refund for the extra tax she will be paying on her savings interest. The bank will automatically deduct 20% from any interest payment so she will need to claim that other 10% back.

Form R40 is what would be needed.

http://search2.hmrc.gov.uk/kb5/hmrc/forms/view.page?record=pf-A5D0R72E&formid=818

LCK73

She is registered for gross on everything right now but thank you all the same.

jem16

LCK73 wrote: »

She is registered for gross on everything right now but thank you all the same.

She'll have to notify the bank and get that removed I'm afraid as she's not entitled to say she is a non-taxpayer.