The following questions have been submitted via our Ask a Planner facility. The answers come from CERTIFIED FINANCIAL PLANNERCM professionals.
The question, from Ravi
We have two flats (both mortgaged) which we are holding as our pensions for when we retire. Both flats are in my husbands name. He does a tax return self assessment every year for each flat. We propose to sell the flats to supplement our pensions (I have only been investing in a work pension for circa 10 years, my husband has had a pension for about 18 years but both pensions are worth very little). We would like to know the most tax efficient way of selling the flats to enable us to keep as much of the proceeds of each sale. We have a very small mortgage on our main residence.
The answer, from Carolyn Gowen CFPCM, Bloomsbury Wealth Management - click here for the response
The question, from Simon:
"I was wondering about salary sacrifice. I am currently just in the higher rate tax band, so paying 40% as my salary is roughly 43k. If i was to make a salary sacrifice of of 2k would this be a more efficient way of using my money as I would be contributing more to my pension and presumably my NI would go down. Would I end up with substantially less per month as a result of this? (I appreciate the value this would have to my pension though)."
The answer, from Tony Larkins CFPCM, Beacon Wealth Management Ltd - click here for the response.
The question, from Judy, aged 51:
"I would really appreciate your help. I have recently become separated after almost 30 yrs of marriage and obviously my retirement plans have changed completely. I work full time as a Nurse but unfortunately only rejoined the NHS pension scheme 5 yrs ago and my pension at 65yrs would barely cover household bills and living expenses. I aim to start saving on a regular basis from March 2015 but do not want to restrict myself too much as need to be able to access money in case of emergencies. I could however spare max £200 a month for pure savings and wondered the best way to safely save/invest this to provide me with the best returns."
The answer, from Alan Dick CFPCM, Forty Two Financial Planning - click here to read the response.
The Question, from Ann, aged 58:
"What and where could I invest £100,000? I would like to know what return per month I could get with no risks."
The answer, from Robin Melley CFPCM, Matrix Capital Limited - click here for the response.
The question, from Catia:
"I'm now in my late 20's looking to create some sort of financial security plan so later on in life I am able to have a great deal of money saved for my pension, but also at this moment in time I am looking to have some spare money to put towards a mortgage and a house. I would like more information on buying and selling shares. Is this an adviseble route?"
The answer, from Christopher G M Wicks CFPCM, Bridgewater Financial Services Limited - click here for the response.
The question, from Diane:
"I have a Scottish Widows personal pension due at 60 and an LGPS pension due at 66. Also buying avcs. I want to find out if transferring the personal pension into the LGPS is a good idea or not and how the new pension changes affect this decision."
The answer, from Richard Wadsworth CFPCM, Carbon Financial Partners - click here for the response.
The question, from Matt:
"I have saved a lump of mine over the last few years and I am going to be going away working in Europe for 6 months and I would like to know the best way to increase the money that I already have over that time."
The answer, from Danny Cox CFPCM, Hargreaves Lansdown - click here to read the response.
The question, from Clifford Smith:
"I have a small Guaranteed Minimum Pension due March 2015 of [at Nov 2014 ] 9.4k I have got a personal pension from 2010 from which I took 25% tax free. I have various health issues and want to maximise the returns."
The answer, from Andy Nevett CFPCM, Freedom Financial Planning - click here for the response.
The question, from Jean Giner:
"Can I select an amount from a redundancy payment to be transferred into my personal pension or are there limits set on the amount by HMRC?"
The answer, from Anna Sofat CFPCM, Addidi Wealth Ltd - click here for the response.
The question, from C H Tooke:
"At my age is there anyway I can reduce my liability for inheritance tax?"
The answer, from Chris Wicks CFPCM, Bridgewater Financial Services Limited - click here for the response.
The question, from Joseph Benjamin:
I am aged 59, my wife is aged 53. I will be 60 years of age in February. I currently work as a Probation officer earning a salary of £38k per annum, my wife works short contracts as an HR consultant earning £60 a year. We have two buy to let properties in the UK, both mortgaged and valued over £800k. Our residential property is valued over £500k with a mortgage of £300k. We have a buy to let in the USA which should provide around $14k a year profit. I have a civil service pension paying about a £100 a month an two smaller pensions with the Post office and the probation service which I could take when I am 60. My wife has her pension in a SIPP. The question is, how and when can we plan to retire?
The answer, from Martin Bamford CFPCM, Informed Choice - click here for the response.
The question, from Joanna Lloyd:
"I've read through some of the profiles and see that the 'ideal clients' have a good nest egg to invest.
I work through a limited company and charge a reasonable day rate so my friends tell me I should be loaded. I am not extravagant but seem to be trapped in a cycle of never getting ahead of my taxes. I have asked my accountants on many occasions to provide me with advanced information but they're reluctant to help, they can't even tell me how much corp tax I'm building up through the year. Do any planners work with people like me to try to help me get a handle on my basic personal finances, my ltd company finances and to help me plan ahead and finally get some stability?"
The answer, from Ian Brown CFPCM, Cosgrove Brown - Click here for the response.
The question, from Neil Coy:
"I want to retire at 61 my company pensions gives an option of a large lump sum + pension using 31% of my lifetime allowance for tax or a larger pension + small lump sum using 36% of my lifetime allowance. How do I work out the best option for me?"
The answer comes from Alan Dick CFPCM at Forty Two Financial Planning Ltd, An Accredited Financial Planning FirmTM - click here for the response.
The question, from John Ghaye, 65:
"With imminent changes to pensions how can I best implement my 3 pensions. Should I act before or after April 2015? Also:
- What are my tax implications to my pension if I have a part time job?
- If inflation & interest rates rise will my pension pot increase in value?
- How do I get enhanced annuity? I take medication for hypertension diabetes & high cholesterol."
The answer comes from Robin Melley, Matrix Capital Limited - click here for the response.
The questions, from Jill:
"I am looking to release 25% tax free lump sum from my work pension but the current scheme does not allow income drawdown. If I move the entire pension amount to an external SIPP and then take the 25% from new provider, would I be liable for any tax and would I lose some of the total sum invested?"
The answer, from Tony Larkins CFPCM, Beacon Wealth Management Ltd - Click here for the response.
The question, from Sara:
"Can you recommend a tool I can use to track all my finances in one place and goals, including my pension, stock and shares and day to day costs?"
The answer, from Carolyn Gowen CFPCM from Bloomsbury Wealth - An Accredited Financial Planning FirmTM - click here for the response.
The question, from Mr. Baines:
"I am 64 and about to work less. I have various assets which I might use for income in my retirement. How would a Financial Planner analyse the options and add value?"
The answer, from Phil Billingham CFPCM from Perceptive Planning - An Accredited Financial Planning FirmTM - click here for the response.
The question, from Mr. Smith:
"I am a UK citizen and domiciled, but not resident for UK tax purposes, having lived/worked abroad since 1970. I have savings of £400,000. Almost all these assets are held in a offshore company, of which I am 100% owner, and the company is non- taxable in the UK. My major financial objectives are to (1) pay for private education of 4 minor children and (2) to generate enough income to continue maintenance of a 5th autistic child, now adult. I have pension of £15k p.a.and the company generates further income around approx £400,000. I am now preparing to retire to UK. If I do take up UK residence, (a) will that render the offshore company liable to UK tax - if so, at what rate? - on account of heart and mind now being UK resident? (b) Could I keep the Offshore company non-taxable and pay myself a fee as Advisor,by perhaps not being Director anymore? Obviously fees would be UK taxable. (c) Am I better off retiring to somewhere like Spain? I need a good Financial advisor."
The answer, from Mark Brownridge CFPCM from Mazars Financial Planning - An Accredited Financial Planning FirmTM - click here for the response.
The question, from J Kilburn:
"I read recently that if you give money away and survive for 6 months that amount doesn't count if you have to go into a care home. I have 4 grandchildren I would like to give money to now - when they most need it. Is what I read correct?"
The answer, from Murray C McEwan CFPCM Flowers McEwan Limited. Click here for the response.
The question, from R Scott:
"The mortgage on my house is due to finish next week. I would like to put it in trust to my children. Do I have to wait until I have the deeds to do this and what are the pros and cons of doing this?"
The answer, from Steve Martin CFPCM at Smart Financial Planning - an Accredited Financial Planning FirmTM. Click here for the response.
The question, from J Ferguson:
"I have about £430,000 in investments in England and the USA. I am resident in UK for tax and have lived here over 40 years retaining my American passport.What would you recommend for my retirement plans? I only have a small personal pension of about £40,000."
The answer, from David Hearne CFPCM from Satis Asset Management. Click here for the response.
The question, from M.Povey:
"I've been advised to take out an off-shore bond and discretionary trust in name of grandson to mitigate some IHT. My concern is that the costs of such a bond and the complexity of winding it up make it not worthwhile. Any advice welcome."
The answer, from Martin Bamford CFPCM from Informed Choice. Click here for the response.
The question, From Mr. Huss:
"My wife is 60 years old and retired recently. I have inheritance tax estimate of £500,000. I decided to have life cover for her while I sort out my estate by gift transfers and trusts. I was in touch with some brokers and IFA's but they all quoted me premiums by taking commission from insurance company. I was told I can't deal direct with insurance company direct. Is it true? If I did it will be more expensive. It does not make sense to me if insurance company can save thousands of pounds commission and give me cheaper premium. I tried to find IFA who can charge me fee upfront and get me cheaper premium. So far I have not found one. It seems to me IFA's will do better by getting commission."
The answer, from Fred Hale CFPCM at Hale Partnership - an Accredited Financial Planning FirmTM. Click here for the response.
The question, from Jen:
"I do not plan to remain in the nhs and may even migrate thus I stopped my pension contributions. How can I get back my money that I gave paid in over the ten years plus? And is there any taxes etc that I can claim back as well?"
The answer, from from Virginia Bolton CFPCM at Fiscal Engineers - an Accredited Financial Planning FirmTM. Click here for the response.
The question, from J. Kilburn:
"I have no debts. I have cash ISAs worth £70,000 and a further £30,000 invested in banks/Bldg Socs at derisory rates of interest. I also have £30,000 in premium bonds. I have pension income of approx £2000 per month. For several years now I have not invested in equities or bonds, thinking them too risky at my age. Should I look at them again?"
The answer, from Murray C McEwan CFPCM at Flowers McEwan Limited. Click here for the response.
The question, from Mrs M Blackwell:
"I have been with the Co-operative Bank since 1969 and have always been happy with their service especially their telephone banking which is excellent so I am reluctant to move away unless their services deteriorate. I have a current account, a savings account and a financial ISA which together amount to about £30,000. Would my money be safe under the Governments pledge to safeguard sums up to £50.000 if the bank folds or does that only apply to investments?"
The answer, from Ruth Sturkey CFPCM, The Red House. Click here for the response
The question, from Mrs A Downes:
"I have a small private pension pot, current value c£24k. I know I must turn it into an annuity within the next 2+ years and would like to realise the maximum income, can you advise please? I am single and childless. If I die before arranging an annuity does the whole amount become part of my estate please?"
The answer, from Mike MacLeod CFPCM at Everett MacLeod Limited - an Accredited Financial Planning FirmTM. Click here for the response.
The question, from N. Larry:
"Could I set up a charitable foundation to benefit my grandchildren and their heirs for the purpose of their education?"
The answer: from Lance Baron CFPCM at Tucana Financial Planning - An Accredited Financial Planning FirmTM. Click here for the response.
The question, from N. Larry:
"What constitutes income as to “gifts out of income” e.g. could I divert dividends rolling up in my self-select ISA?"
The answer: from Lance Baron CFPCM at Tucana Financial Planning - An Accredited Financial Planning FirmTM. Click here for the response.
The question, from C.Clarke:
"I currently have a company DCS pension where all investment funds are going to the company's default fund. I need guidance/advice on where I should be focusing my investment funds in the current market. I have access to selected UK, Global, Regional Equity funds; Balanced and AlternativeBalanced funds; Bonds and Liquidity funds. I am currently of an age where I can be fairly aggressive in terms of risk (in an attempt to gain some good returns) and would look to move to my conversative funds the closer I move towards a retirement age. Can you help please?"
The answer, from Justin King CFPCM at MFP Wealth Management. Click here for the response
The question, from M. Waite:
"I would like information on the options for closing a Skandia Permanent Protection Plan, at present invested in the Skandia Diversified Fund, in order to obtain the cash and because the life assurance element is no longer needed. I would like to know how I can find out the current value, whether there is a penalty for closure, and how to close it."
The answer, from from Ruth Sturkey CFPCM at The Red House Consulting Ltd. Click here for the response.
The question, from Melanie in Oxford:
"Please explain inheritance tax to me! My parents are elderly, in their early nineties, living in their own home, which is worth about £600,000. Should we, their four children , make any plans to ease inheritance tax?"
The answer: From Mike Stafford CFPCM at Stafford & Co. Click here for the response.
The question, from Colin B:
"My mother (now 97) has cash and investments which if she died tomorrow would be about £250,000 above the IHT threshold. (She was widowed earlier this year) My parents failed to make the most of planning for IHT. Is there anything to be done (other than that already allowed under IHT rules) to mitigate the IHT liability? I will be her Executor and am chief beneficiary of her will. I also have EPA and 3rd party mandate on her Banking."
The answer: From Neil Bailey CFPCM at Fortitude Financial Planning - an Accredited Financial Planning FirmTM. Click here for the response.
The question, from A.Shah:
"I have £156,000 in a Sipp with Barclays stock brokers sitting doing nothing. I want to maximise returns as I do not have have any other pension except state pension. Hoping to use above as a drawdown after 5/7 years. My wife is five years younger but will like to retire at 60 and will have a local eduction pension where she has worked as a nursary nurse for the last 13 years. We own our house which is free from any mortgage. Can you please advise how best to plan for our retirement?"
The answer: From Craig Palfrey CFPCM at Penguin Wealth - an Accredited Financial Planning FirmTM. Click here for the response.
The question, from P. Butler:
"The Maven group of VCTs are offering a "linked" investment into six of their VCTs with immediate tax benefits which could be used to offset capital gains on other investments. Their past investment and dividend record looks good and I am wondering whether to recommend this as an investment opportunity to a friend with potential capital gains tax problem on other investments. Is there someone there who is conversant with the pros and cons of this type of investment please?"
The answer: From Danny Cox CFPCM from Hargreaves Lansdown. Click here for the response.
The question, from J.Henderson:
"I have several small private pension plans some matured and paid up, some maturing at age 65. Do I have to consolidate and buy a single annuity. What are my options?"
The answer: From Chris Bowmer CFPCM from Fortitude Financial Planning - an Accredited Financial Planning FirmTM. Click here for the response.