Inheritance question

MM2002

AlanP wrote: »

Contributing to a pension for your wife would be my starting point and benefit from the HMRC topup.

She could put in her £15k * 80% = £12k this year which HMRC would add £3k to and the same for a few years if you can afford it.

Considering she will be paying about £700 a year in Income Tax a £3k "gift" from HMRC seems like a good deal to me.

I think you need to carefully set out your OBJECTIVES - what do you want the money to do for you / your family?

That should help with narrowing down the options.

Hmm, interesting! Hadn!!!8217;t considered that. My objectives really are to be able to pay for a holiday or two a year on what is made from the interest/income whilst seeing my total balances stay the same annually.

We haven!!!8217;t got any isa!!!8217;s Or premium bonds so just reading up on that, but my BTL home has increased in value by 100k in the last 3 years, and given the income it generates monthly it always seems a good option, although I realise the risk and changes that are coming in that sector make it less desirable.

I think what I!!!8217;m asking here, is what to do with it in the very short term, say next 6 months, as when I had my car loans and c.cards my balances were going south every month even when being frugal, so wish to monitor this before committing it all long term, but having such a balance doing absolutely nothing I feel is a wasted opportunity to get at least something back.

Should I look to opening these high interest accounts on small amounts, I.e nationwide 5% on 2.5 k and the like. Set up dd!!!8217;s for the 1k a month in then out, maybe with a few accounts?

MM

xylophone

It seems to me that you should both obtain a state pension forecast.

https://www.gov.uk/check-state-pension

I would look into pension provision for your wife.

https://www.taxcafe.co.uk/pensionmagic.html

https://www.pensionsadvisoryservice.org.uk/about-pensions/saving-into-a-pension/pensions-and-tax/pension-tax-relief-eligibility

If she is earning £15,000 this tax year, she can pay up to £12,000 into a personal pension and receive tax relief of £3,000.

If neither of you have ever had a Nationwide Flexdirect current account, you could open one each and a joint and earn 5% for a year on a total of £7,500.

A 5% Flexclusive monthly saver is also available.

Then three TSB Plus - total of £4,500 @3%.

Assuming that you can drum up the 12 DDs between you, you might each open a couple of Tesco current accounts- (3% on a total of £12,000).

Do your children have CTF/JISA? It may be worth considering a gift to them.

https://www.gov.uk/junior-individual-savings-accounts

chockydavid1983

It would certainly make sense to make your emergency cash buffer work as hard as it can- I have mine spread over the top paying current accounts and regular savers.

MM2002

Radiantsoul wrote: »

I think you have £158k of equity(350-192) in your existing BTL. You must have a mortgage of around 2% to get a mortgage payment of £320 per month. So asume no void periods or costs and no price increase you get about £10.5k per year or a yield of 6%. Plus whatever increase in property prices there are.

The risk is if you remortgage at 5% the yield drops to 3%. Or if the property prices fall. Or if the tenants trash the place. Personally I feel dealing with tenants is more hard work than I can be bothered with.

I suspect BTL looks pretty good to you as you have a low mortgage rate and property prices have gone up and they may not do so in the future.

If it were me I would probably open a S&S ISA, you can put £20k in this year and £20k after the new tax year. I might be tempted to go on a nice holiday as well!

Many thanks for this. Your figures are correct, and with the BTL, we've had it for 3 years now, had a few tenants and thankfully no horror stories(Yet!) its a 4 bed detached that has gone up from 250k to 350k in that time, but inheritance tax will kill that profit should I sell, so keeping hold of it I think is the only option.

I've never looked into ISA's so havent a clue where to start, but will do so now for sure!

Before the inheritance I had a couple of car loans and 0% credit card bills that equalled about £500 per month, and no matter what I did, my balance(about 15k at the time) went south, causing some anxiety for me(im a bit of a worrier!!) but hopefully this is a thing of the past.

Thanks again for your advice, Im considering all options and will update what decision is made!!

MM2002

DiggerUK wrote: »

The inheritance will be a bittersweet experience, hope you are settling down.

Getting rid of the mortgage on Digger Mansions was the finest decision we ever took. Get rid of the mortgage ASAP. You seem to have a good plan, stick to it.

No recommendation from me to pursue the BTL plan. If I can persuade you against the plan in any way, then make a list of all the downsides. Some have been mentioned already. I have to add that I believe you have made your mind up before coming here.

I would urge you to look outside of pension saving plans for retirement. As things stand you have the money locked away for another ten years. There are plenty of options for retirement savings that give you more flexibility.

You also mention 18k as a rainy day fund. With the household income good, do you need that much, or even any at all. Interest rates are still low, so a loan in emergencies would not be a danger. If things change then build a fund.

In the here and now put the cash somewhere safe like NS&I. That will give you time to sort out what to do..._

Many thanks Digger!

I have just secured a 10 year fixed deal at 2.39% and if I overpay by the max 5% will leave less than 5k at the end. The BTL is int. only, but my accountant seems to think at this point to not pay capital, get my residential paid off first. my BTL mort. is due for renewal in August.

Many people mentioning NS&I !! could be the way I go.

Thanks again buddy!!

MM2002

xylophone wrote: »

It seems to me that you should both obtain a state pension forecast.

https://www.gov.uk/check-state-pension

I would look into pension provision for your wife.

https://www.taxcafe.co.uk/pensionmagic.html

https://www.pensionsadvisoryservice.org.uk/about-pensions/saving-into-a-pension/pensions-and-tax/pension-tax-relief-eligibility

If she is earning £15,000 this tax year, she can pay up to £12,000 into a personal pension and receive tax relief of £3,000.

If neither of you have ever had a Nationwide Flexdirect current account, you could open one each and a joint and earn 5% for a year on a total of £7,500.

A 5% Flexclusive monthly saver is also available.

Then three TSB Plus - total of £4,500 @3%.

Assuming that you can drum up the 12 DDs between you, you might each open a couple of Tesco current accounts- (3% on a total of £12,000).

Do your children have CTF/JISA? It may be worth considering a gift to them.

https://www.gov.uk/junior-individual-savings-accounts

chockydavid1983 wrote: »

It would certainly make sense to make your emergency cash buffer work as hard as it can- I have mine spread over the top paying current accounts and regular savers.

Will certainly look into these accounts!
Seems like a lot of work setting up DD's, payments etc, but once set up correctly guess they run themselves. Will look ito a guide on this(must be one here somewhere!!)

Pensions all seem ok, but it ties the money up, and from whats happened to my BTL over the past few years, wont bring anywhere near the return a BTL would, although I know that I may have just got in at the right time and this bubble has now burst.

Interesting no one has mentioned premium bonds! Is this a no-goer? From what I understand(Never had them) I could max out (25k?) and at least this will be doing something?

Thoughts?

Thanks again guys

Radiantsoul

The CGT would be large, but you would still have quite a bit left over.
You have a gain of £100k less whatever selling costs. You have a 11k annual allowance, and pay 28% on anything after that. So you will probably pay £24-£25k out of the proceeds.

MM2002

Radiantsoul wrote: »

The CGT would be large, but you would still have quite a bit left over.
You have a gain of £100k less whatever selling costs. You have a 11k annual allowance, and pay 28% on anything after that. So you will probably pay £24-£25k out of the proceeds.

True but am looking to hold on to the BTL.

Initial plan as mention in OP was to sell the BTL on retirement, maybe not so anymore, but this is a long way off(20 years arghhh!) and by then hopefully the property will be worth substantially more, and paid for itself and provided an income en route.

AlanP_2

MadMatt2002 wrote: »

True but am looking to hold on to the BTL.

Initial plan as mention in OP was to sell the BTL on retirement, maybe not so anymore, but this is a long way off(20 years arghhh!) and by then hopefully the property will be worth substantially more, and paid for itself and provided an income en route.

If you don't want to work for another 20 years is that actually an objective?

Many people retire before that and live off pensions (from Age 55'ish), Savings & Investments, BTL or P2P Income etc. before taking State Pension 65/66/67 or whatever.

MM2002

AlanP wrote: »

If you don't want to work for another 20 years is that actually an objective?

Many people retire before that and live off pensions (from Age 55'ish), Savings & Investments, BTL or P2P Income etc. before taking State Pension 65/66/67 or whatever.

Well that would be nice, but I’m a realist!

If it happens I’ll remember your post pal:beer: