Tax man caught up with me....

Upwind
Upwind Posts: 184 Forumite
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in Savings & investments
I have a savings pot of £350k and have managed to avoid tax investigation to date. Unfortunately, they have caught up with me and although I have about £180k in ISA and premium bonds, they have collared me for a bit in tax..... So, how do I escape the tax burden guys....? I have the ability to take out another ISA in April and can up my premium bonds to £50k also, so can effectively take my taxable amount down to about £150-160k, but what should I do next? I could give my dad £20 to invest in ISA for me, or look to invest more in peer to peer stuff - any ideas?
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Comments

  • dunstonh
    dunstonh Posts: 116,358 Forumite
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    So, how do I escape the tax burden guys....?

    Pension contributions
    annual ISA allowance
    Unwrapped investments using dividend allowance use and annual CGT allowance use.

    Those are the usual suspects with that sort of figure.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Zanderman
    Zanderman Posts: 4,683 Forumite
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    I assume you're talking about tax on interest? And that interest from your non-ISA/non Premium Bond savings take you over the threshold for tax exemption?

    With interest rates being what they are it can't be a huge tax liability? An average of, say, 2% (and that's surely optimistic) on 150k would only be £3k. If a basic tax-payer that would be tax on £2k (over the 1k allowance) at 20% which would be £400, reducing effective (net) interest to 1.73%, which is still good. Less of course if a higher rate payer. Is that really such a burden?

    At first sight there's no much you can do - peer to peer is also taxable isn't it?

    But, frankly, if you've 350k saved in cash perhaps you should do something more imaginative with it than just keeping it in cash. Investments? Pension?
  • Upwind
    Upwind Posts: 184 Forumite
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    Both of you are spot on guys and I'm being stung for just under £600 - which I ain't going to loose sleep over - I just hate giving the taxman any of my hard earnt. is it a good idea to get my old man to invest for me, or are they likely to smell a rat now? He would be OK doing it as he doesn't like ISA investments and he isn't getting stung on his tax...
  • Keep_pedalling
    Keep_pedalling Posts: 16,618 Forumite
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    Upwind wrote: »
    Both of you are spot on guys and I'm being stung for just under £600 - which I ain't going to loose sleep over - I just hate giving the taxman any of my hard earnt. is it a good idea to get my old man to invest for me, or are they likely to smell a rat now? He would be OK doing it as he doesn't like ISA investments and he isn't getting stung on his tax...

    If you are suggesting putting your cash in his name to save a pittance you would be bonkers, unless you really want to put it at risk of inheritance tax, or being used for care costs.
  • jaybeetoo
    jaybeetoo Posts: 1,337 Forumite
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    dunstonh wrote: »
    Pension contributions
    annual ISA allowance
    Unwrapped investments using dividend allowance use and annual CGT allowance use.

    Venture Capital Trusts
  • Upwind
    Upwind Posts: 184 Forumite
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    jaybeetoo wrote: »
    Venture Capital Trusts

    An option you think? - I've heard about them, but not thought I was in that league - any suggested trust?
  • Upwind
    Upwind Posts: 184 Forumite
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    Keep_pedalling wrote: »
    If you are suggesting putting your cash in his name to save a pittance you would be bonkers, unless you really want to put it at risk of inheritance tax, or being used for care costs.

    Why bonkers? I was thinking of putting it in his name and skimming the interest just to take it out of taxman view. He hasn't got a fortune behind him, so I doubt inheritance tax would figure...
  • dunstonh
    dunstonh Posts: 116,358 Forumite
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    jaybeetoo wrote: »
    Venture Capital Trusts

    Suitable for around 1% of investors. Bit early to introduce those without more information to go on.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Upwind
    Upwind Posts: 184 Forumite
    First Anniversary Combo Breaker First Post
    dunstonh wrote: »
    Suitable for around 1% of investors. Bit early to introduce those without more information to go on.

    Maybe need to investigate further and take IFA advice - thanks...
  • jimjames
    jimjames Posts: 17,611 Forumite
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    Upwind wrote: »
    Both of you are spot on guys and I'm being stung for just under £600 - which I ain't going to loose sleep over - I just hate giving the taxman any of my hard earnt. is it a good idea to get my old man to invest for me, or are they likely to smell a rat now? He would be OK doing it as he doesn't like ISA investments and he isn't getting stung on his tax...

    Alternatively you could consider that £600 is a good contribution to the services you receive from the state. Make plans to legally reduce burden in future but passing money to other people is likely to cause more issues than paying a few quid tax on interest.
    Remember the saying: if it looks too good to be true it almost certainly is.
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