Advice on investing for regular monthly income

hazeybe

Hi everyone I am new to this forum so hope I am posting correctly. I am looking for some advice on receiving income from investments. We are planning to move abroad in the new year, we have enough cash to keep us going for nearly 2 years along with rental income from 2 properties in the UK. If we like it we plan to sell the properties here and buy something abroad and then have between £150000 and £180000 to invest to give us income which will have to last 15 years until our pensions start paying out.

Been to see an IFA who mentioned investment bonds and also offshore bonds. Would this be the best option or are there any other ways of doing this?
Thanks in advance

dunstonh

Offshore bonds certainly fit your profile with you looking to move abroad.

The tax deferral works really well with people who are in the UK at the start but are overseas at the end (or return after a spell aproad).

As offshore bonds are just a tax wrapper and not an investment, you can put virtually any packaged product inside of them. This includes savings accounts and investment funds. All risk profiles can be catered for.

You would also get institutional rates which can be better value than retail rates.

EdInvestor

Where are you planning to move to?

hazeybe

EdInvestor wrote: »

Where are you planning to move to?

We are planning on Tenerife

EdInvestor

From the UK end, you'll both get the personal allowance of more than 5k a year so that should mean your rental income is tax free. After 5 years residency abroad, you could sell the properties and pay no capital gains tax on the proceeds. It might be sensible to sell just one earlier on if you need to, transferring the ownership into joint names as part of the sale process so you can take advantage of 2 CGT allowances.

Basic rate or non taxpayers have no tax to pay on dividends from UK shares or equity unit trusts: and the annual capital gains tax allowance is over 9k, so you should look into this type of investment.It should also provide long term growth even if you take the dividends out as income.

A very low cost example:
http://www.fool.co.uk/specials/2006/specials060208.htm

You can also use moneymarket type funds to park cash without incurring tax and manage your investments online via a low cost broker like
www.selftrade.co.uk which accepts expat customers.

Have you got around to checking Spanish tax rules on investment income yet?

Some basic info
http://www.internationaltaxadviser.co.uk/content/view/29/54/

http://www.spainaccountants.com/it.html#Rental%20income

dunstonh

Shares cannot be held within an offshore bond without it being classed as a portfolio bond and it would lose the tax advantages.

cheerfulcat

hazeybe wrote: »

Been to see an IFA who mentioned investment bonds and also offshore bonds. Would this be the best option or are there any other ways of doing this?

I would suggest that you take advice in the country in which you intend to settle. In the meantime, cash in a savings account gives the greatest flexibility.

EdInvestor

dunstonh wrote: »

Shares cannot be held within an offshore bond without it being classed as a portfolio bond and it would lose the tax advantages.

I wasn't suggesting they should be. Offshore bonds may be useful but the same effect may be achievable by other means at much lower cost.

The OP needs to consult an advisor who is knowledgable about both UK and Spanish rules.An ordinary onshore IFA won't be qualified.

dunstonh

An ordinary onshore IFA won't be qualified.

Why not? We are both licenced, authorised and qualified to if the individual is a UK ex-pat (or will be). There are certain countries you would refuse advice on but not Spain.

Offshore bonds may be useful but the same effect may be achievable by other means at much lower cost.

Depends on so much we just dont know. Investment funds bought within offshore bonds can be the institutional funds with lower annual management charges which can be upto 0.75% p.a. cheaper than the retail funds. Plus you can have savings accounts and fixed term deposits in an offshore bond. Again, institutional rates. The reduction in yield on an offshore bond (excluding adviser costs - which are explicit) can be as low as 0.1%.

Like onshore bonds, some of the modern offshore bonds are so much more flexible than they used to be years ago. Offshore bonds used to be very expensive but that isnt the case nowadays. That said, the charges tend to be fixed amount rather than percentages and that obviously suits larger investments more than smaller investments.