Investment Of Large Amount - What To Do?

IanfromHants

Morning all,

I have a two fold question if I may please.

I am about to receive a decent amount of money through company dividends, as the company I work for has just been acquired.

My first question is what to do with the money. I need/want to invest it for a minimum of a year, as I will not need it until some time in 2027.

Where would be the best place to put it.

Ideally somewhere that I can put it all, but may be limited too how much I* can put into a savings account as I believe some have thresholds?

Easy access, just in case.

And no tax to be paid on it at any point at all

If anyone can advise, as this is all a bit of a minefield to me

And the second part, I know I will have to pay tax on the payment to me.

Any ideas how much?

Is it Capital Gains Tax, and if so, what % would I pay.

Thank you all so much, in advance, for your help, as I do get a bit kerfuddled on this type of subject

Ayr_Rage

Define LARGE.

To me that would be over £50,000, what do you consider a large sum?

wmb194

https://forums.moneysavingexpert.com/discussion/6665508/investment-of-large-amount-what-to-do

"I am about to receive a decent amount of money through company dividends, as the company I work for has just been acquired."

Dividends? Usually when a company acquires your shares it's a capital gain. Depending on your tax band the tax rate on the capital gain (sale proceeds - cost) is 18% or 24%. Each tax year you have a £3k 0% tax free allowance which you can use against your year's gains.

https://www.litrg.org.uk/savings-property/capital-gains-tax#9

If you need the money in a year's time then just find a good savings account. To keep it within the FSCS coverage limit you might want to split it between banking groups if >£120k per account.

https://moneyfactscompare.co.uk/savings-accounts/

IanfromHants

https://forums.moneysavingexpert.com/discussion/comment/81975370#Comment_81975370

Around £40,000

kempiejon

Easy access, no tax >£50k, Premium Bonds?

£20k Cash Isa and the balance unsheltered, a cash savings account, depending on personal tax situation and interest rates, could still stay within limits if no other significant savings.

Albermarle

And no tax to be paid on it at any point at all

So you would prefer to get a lower return, as long as you paid no tax ?

Vitor

One year is far too short for investment, you need to be thinking about savings such as a 12 month fixed rate ISA (£20k) and a fixed term savings for the rest. You'll pay income tax on interest outside the ISA. If you put into Premium Bond, you should average 2%-3% tax free.

The OP really needs to find out and clarify under what scheme the payout is due after the company buyout, e.g. Enterprise Management Incentives (EMI) or Company Share Option Plan as these will attract CGT.

EthicsGradient

Other information needed for suggestions to be meaningful:

Are you married? Are you (and your spouse, if applicable) basic or higher rate taxpayers? Do you have plans to use any part of your ISA allowance(s) for any money from other sources in the current tax year?

DRS1

There was a takeover/merger of Dr Pepper many years ago where the cash element was structured as a dividend. I can't remember why but I remember cursing whoever came up with that plan.

OP if you are being paid dividends that means you must have some shares. Are you selling them as part of the takeover?

If you have options or other employee share incentives then you will almost certainly get a letter (at or towards the end of the takeover) explaining what choices you have - eg exercise your option and accept the offer - and the tax consequences of each choice. It may be best to wait for that letter.

As mentioned already £40k will fit neatly into a couple of ISAs if you have a spouse and you both have the full ISA allowance this year.