£265k - advice on how to invest

missile

You might also want to consider NS&I Index-linked Savings Certificates. You can each deposit £15K and they are tax free. see http://www.nsandi.com/

Steve_xx

missile wrote: »

You might also want to consider NS&I Index-linked Savings Certificates. You can each deposit £15K and they are tax free. see http://www.nsandi.com/

I think there are two issues of Indexed-Linked Certificates (3 year and 5 year) currently available. So they could invest upto 60k, ie 15k apiece in each of the two issues.

Jonbvn

Steve_xx wrote: »

I think there are two issues of Indexed-Linked Certificates (3 year and 5 year) currently available. So they could invest upto 60k, ie 15k apiece in each of the two issues.

You could set up trusts (AFAIK), such that you could effectively double the the 60k to 120k. However, may not be worth the hassle for just a year.

Jimcole_2

Steve_xx wrote: »

On 250k your wife would certainly enter the lower rate tax band if it was all in her name.

However, regarding the ISA's; you can open one each before April and that will take care of £6k and shield it from the taxman. In the new tax year starting in April you will be able to shield a further £3600 each in another ISA.

If you invested the 250k in a bank account paying 6% then you would derive £15k interest on it, so you or your wife would be liable to some tax on it. Your wife would be liable to less tax as she's not using her taxfree allowance due to her not earning.

If you put it all in your name it could push you into the 40% tax bracket if you're not careful. So you need to do the sums here.

thanks Steve_xx

this might be a really stupid question but i don't undertand how that would push me into the 40% tax bracket? aren't i automatically in that bracket because i'm in the higher income tax bracket?

Steve_xx

Jimcole wrote: »

thanks Steve_xx

this might be a really stupid question but i don't undertand how that would push me into the 40% tax bracket? aren't i automatically in that bracket because i'm in the higher income tax bracket?

Ah well I missed the first bit. I didn't realise that you were a higher rate tax earner. So then, if your job puts you in the 40% bracket and you have 250k to invest then yes, it makes good sense to have the 250k in your wifes name as she will only be taxed at 20% on the interest. I'm assuming interest at 6% here to yield interest of 15k approximately per annum. She might also be able to claim the tax back on the first £5,225 of interest paid, ie this would be her personal taxfree allowance.

But, you should both use your ISA allowances for this year, ie 3k each.