Help! £10,000 to save/invest

turbotoby

Hi,

My mother was left some money through inheritance which she doesn't pay tax on.

She would like to give £10,000 to me to contribute towards my student loan (total a little over £15,000). However, I am not sure of the gift tax implications of this (I am self employed).

Nevertheless, I feel using this money more effectively by saving it and earning interest would be more frugle. I want to use £3000 of it on the clean-tech stock market. The rest I will save.
If I set up an ISA I can have £3000 in cash tax-free, but can the £3000 I want to use on the stocks be within this ISA and tax-free?
What should I use the other £4000 - a high interest savings account?

Thanks Toby

Aegis

turbotoby wrote: »

Hi,

My mother was left some money through inheritance which she doesn't pay tax on.

She would like to give £10,000 to me to contribute towards my student loan (total a little over £15,000). However, I am not sure of the gift tax implications of this (I am self employed).

If she dies within 7 years of gifting you the money, you'll need to pay some inheritance tax on the gift value (starts decreasing after 3 years until the end of 7 years, at which point it's a non-issue).

Nevertheless, I feel using this money more effectively by saving it and earning interest would be more frugle. I want to use £3000 of it on the clean-tech stock market. The rest I will save.

An interesting strategy, and one you might want to discuss more on this board, as you might find other inspiration.

If I set up an ISA I can have £3000 in cash tax-free, but can the £3000 I want to use on the stocks be within this ISA and tax-free?

This tax year you can set up a mini cash ISA with up to £3k and a mini stocks and shares ISA with up to £4k in investments. They're different ISAs. You could get a maxi ISA, but if you want to use all £3k of your cash allowance there's not much point.

What should I use the other £4000 - a high interest savings account?

Sounds like a plan. Then dump most of it into another cash ISA in April (£3600 limit)