Inheritance, what to do with it

jaylockwood1978

Sadly, I’ll be inheriting about 130k. Now I know people can provide actual fininacial advice but looking for some opinion.
my plan is to put 20k in both mine and partners ISA as I’m just over the 40% wage so will be paying 40% on any interest. Was looking at putting 9k in an isa for my son.
i plan to make an emergency fund also.

With the rest am I better paying a lump sum off my mortgage? I’m currently 3 years into a 5 year fix at 1.94% and owe £343,000.

cheers
Jay

Keep_pedalling

Any money you put in an ISA for your son will be a gift. If you don’t want it back then fine but you should do it as a deed of variation so it does not form part of your estate.

Voyager2002

Your mortgage is fixed at below the rate of inflation. You would gain just 1.94 per cent on any funds you use to reduce it, while you can easily earn in excess of 5 per cent (before tax).

You might explore tax-exempt investments such as Gilts or Premium Bonds.

ColdIron

jaylockwood1978 said:

I’m just over the 40% wage so will be paying 40% on any interest

A modest pension contribution would receive 40% tax relief and could bring you back into basic rate tax restoring your £1,000 personal savings allowance

pecunianonolet

Would put 50k into Premium Bonds for you and partner, max out all ISA's, perhaps use S&S ISA as returns on cash will go down and investments perform over the long term (10 years+) better, create an emergency fund.

A bit into pension, go on a decent holiday, make some upgrades to your house if needed, perhaps make a donation (even after gift aid you can claim the additional tax relief as you're a higher rate tax payer).

Albermarle

40% tax relief on pension contributions is very generous and you should take advantage of this as a 40% taxpayer.
Although it depends on how much 40% tax you pay. as to how much you can take advantage.

wjr4

jaylockwood1978 said:

Sadly, I’ll be inheriting about 130k. Now I know people can provide actual fininacial advice but looking for some opinion.
my plan is to put 20k in both mine and partners ISA as I’m just over the 40% wage so will be paying 40% on any interest. Was looking at putting 9k in an isa for my son.
i plan to make an emergency fund also.

With the rest am I better paying a lump sum off my mortgage? I’m currently 3 years into a 5 year fix at 1.94% and owe £343,000.

cheers
Jay

You need a financial plan rather than just throwing money at products you’re unsure of. What are your objectives? How old are you etc? 

penners324

I'd be putting as much of that into my pension as I'm allowed. Ie £50k

The rest is sensible. Use it to pay down the mortgage when the fixed rate ends.

Veteransaver

I'd at least consider putting in the amount of 40% taxed income into a pension. Ie if you have taxable income of £60k this year, put £10k in a pension this year, and drip feed it in over subsequent years to maximise the 40% savings.

I'd also keep some aside to pay a chunk off mortgage when your fixed rate ends, depending on where interest rates are in 2 years time.

wjr4

penners324 said:

I'd be putting as much of that into my pension as I'm allowed. Ie £50k

The rest is sensible. Use it to pay down the mortgage when the fixed rate ends.

Surely that depends on how old they are?

jaylockwood1978

Thanks for all of the comments, I didn’t receive any notifications so am sorry for not replying earlier.
im 46 and work in the NHS so have the NHS pension. 

As for goals, its all very sudden so wasn’t expecting to inherit the money. 

I’ve maxed out an ISA and plan to max out my partners ISA too. Also fill an ISA this year for my son. 

As for mortgage, so it’s not worth overpaying until the fixed rate ends?