Inheritance

joyfultuna

Hi, I am after some advice if possible please.

I am about to inherit 150k.
I have no savings or private pension.
I will be eligible for a full Gov pension though but not for 12 years yet.
I am a single 55 y/o female who has been living on Universal Credit for the last year due to long term poor health.
Obviously when my money comes through my UC will cease and I would not qualify for PIP.
I hope to go back to doing some regular work but I am a self employed gardener, cannot work long enough hours due to health to earn a sensible amount.
I'm in rented accommodation.

SO..my best options for making this money work for me as well as possible? 
*Some high rate savings accounts? (one would need to be easy access as i will need to live on it to a degree)
*An ISA?
* Is it worth starting a pension now , so I would get the government top up or is saving account better?

I am complete novice to the world of money, never had much, so please talk in simple terms!
Thankyou!

Brie

Why are you not eligible for PIP?  You might want to talk to someone (Citizen's Advice) about that.  Or if you have a specific condition whatever helpful charity that's dedicated to that.  

Given that you're 55 you might be able to use the money to put into a pension.  I'm currently looking at getting an annuity with less money than you are talking about that will give me (12 years old than you and with some health issues) a annual income of around £7k.  You might want to talk to an IFA or run the numbers through an annuity calculator just to get an idea of what you may get.  And talk to the MAPS about what a pension can do for you.

Money and Pensions Service

redpete

As you are not earning an income you can contribute up to £2880 a year into a SIPP to qualify for HMRC contribution of £720, making £3600 in total. As you are 55 you could start drawing on your SIPP now; it is worth a free discussion with Pension Wise to understand your options. 

You can put up to £20000 a year into an ISA.  Cash ISAs are the simplest and there are easy access cash ISAs earning over 4% interest a year.

Non-ISA cash savings also pay 4%+ and can be easy access.

If you have no income at all you can earn up to £17570 a year interest before you pay any tax on it (£12570 personal allowance + £5000 starting rate for savings. With £150k you will be under this threshold. It is still worth using your annual ISA allowance in case at some time in the future you start earning more money from work (or pensions).

The annuity option Brie mentions above is also worth looking at.  Health issues can mean that the rates are improved.

Albermarle

I hope to go back to doing some regular work but I am a self employed gardener, cannot work long enough hours due to health to earn a sensible amount.

Have you thought about doing a different job that is less strenuous than gardening, so that you could work longer hours and have less time off sick maybe?

Using a small part of the inheritance to retrain for a different type of employment, may well be a good investment.

joyfultuna

Thanks Brie and redpete, could you explain what you mean by an annuity please? 
And I don't understand this : "If you have no income at all you can earn up to £17570 a year interest before you pay any tax on it (£12570 personal allowance + £5000 starting rate for savings." I thought anything over £12570 was taxed? Many thanks.

And yes Albermarle definitely need a less strenuous way of working!

Eco_Miser

joyfultuna said: 
And I don't understand this : "If you have no income at all you can earn up to £17570 a year interest before you pay any tax on it (£12570 personal allowance + £5000 starting rate for savings." I thought anything over £12570 was taxed? Many thanks.

Actually, it's £18570 a year. Up to £5000 starting rate for savings and £1000 Personal Savings Allowance are each taxed at 0%, so you don't pay any tax, but it is taxed income - which can affect marginal tax rates and other things for people near the top of a tax band.