Investment Advice

napoleon

Hi, I am not presently in employment but recently inherited a large sum of money £800K. If I just keep it in a high interest rate account e.g. Bradford and Bingley e-saver acc. paying 6% gross as it is at the moment for this tax year I'll have to pay higher rate tax and fill out a tax return every year (which I don't presently have to do and don't really want to).

Is there any legal way I can avoid higher rate tax by putting all or most of the money in some other investment vehicle?(but not shares). e.g. National Savings or Premium Bonds? They are one way of avoiding high rate tax? Thanks for any help.

jem16

With a sume this large you should really be seeking help from an IFA.

National Savings Certificates would allow £30k so barely a dent in the amount.

Aegis

Definitely worth talking to a couple of IFAs with that sort of sum. Try going to www.unbiased.co.uk and typing in your post code (and nothing else) to get the numbers of a few operating near you.

Options you can discuss are ongoing ISA contributions (£7200 per year), pensions (up to the lower of your annual earnings or about £225K per year with tax relief on contributions), national savings products (£15k per issue, plus another £15k in trust if I remember correctly), investment bonds (a touchy subject, but if you take one out for enough time to get as much of your windfall as possible into tax-exempt shelters, you might be able to be taxed on most of the gain as a basic rate taxpayer), venture capital trusts, and also standard taxed products like unit trusts, OEICs, shares, bonds and gilts.

If you're married you can talk about options to equalise your assets to make use of two sets of tax, ISA and pension allowances.

All in all, there's a lot to talk about!

If you're planning on any big purchases, like property, then make sure you have a clear list of objectives in mind when you talk to the advisers, as they'll need to take that into account when constructing a list of suggestions.

Best of luck, and remember that living off the interest you'd still be earning more than most people in the UK. Don't blow it and this will last you the rest of your life in one respect or another!