Ask Money

Ask Money: where do I stand on pension contribution limits?

August 9, 2019

Reaching age 55 was a rude awakening in terms of pension planning and provision. Since then I have been able to pay the maximum £40,000 annually into my self-invested personal pension and to use carryover from previous years. My plan is to pay in the maximum £40,000 during the first six months of the next financial year and then take early retirement in October 2020. I can access a small number of final salary schemes for both taxable and tax-free income, leaving the Sipp invested for a few years before taking it.

Ask Money: can we use our wives’ CGT allowances?

July 29, 2019

My brother and I own equal shares in a house valued at £120,000 that we need to sell soon. The original cost was approximately £60,000. It is registered in our two names only. For capital gains purposes, are we able to use each of our wives’ £12,000 allowance as well as our own to minimise the impact of capital gains tax, or would we have to register our wives as co-owners to be able to do this?
Allan Johnston, by email

Ask Money: should I buy an investment trust on a premium or an open-ended fund?

July 16, 2019

When buying an investment trust, the share price discount or premium may reflect on returns. If I were to buy a trust because of its discounted price, I would be worried about when its performance would turn around for the better. In contrast, a fund’s price reflects its performance, so I don’t have to worry about the implications of a discount or premium.

Ask Money: how will CGT play out with family in Australia?

July 1, 2019

I have a discretionary trust that has run for almost seven years. Soon it will pass out of my estate into the estates of three trustees, my daughters. If they sell the property in the trust, they will be liable for capital gains tax. One of them lives in Australia and does not pay UK tax. Assuming the estate is divided equally, a third to each, there would be capital gains tax due to HMRC on two-thirds of it. But how would my daughter in Australia be treated?
Peter Abbott, by email

Ask Money: what’s the tax position on this gift?

June 24, 2019

I plan to gift £200,000 to my 50-year-old daughter, who has learning difficulties and no income. I propose to invest it for her in the City of London investment trust through a Halifax trading account at a platform fee cost of £12.50 a year. The dividends should generate about £8,000 a year for her bank account, which would cover the cost of a leasehold studio flat and living expenses. My wife and I are 74 and own other assets that will attract inheritance tax. Will the £200,000 gift be a potentially exempt transfer? Or will our daughter have to pay tax on the gift?

Ask Money: will my idea for passing on a buy-to-let flat work?

June 17, 2019

I have a buy-to-let flat that will trigger a big capital gains tax bill if I sell it. Can I pass ownership in tranches to my daughter (10% a year) so that the gain on each tranche is within the CGT annual exemption. If I live for seven years after the final transfer, I assume there would also be no IHT to pay. The flat has no mortgage. The only downside I see is the legal fees for each transfer.
Eddie Montreaux, Brighton

Ask Money: how do I resolve my pension quandary?

May 31, 2019

I recently took up a job where I have become a member of the Local Government Pension Scheme. I’m trying to work out if it would be beneficial for me to transfer into the scheme two private pensions I hold, which have transfer values of £95,435 (Aegon) and £13,514 (Aviva).

Regarding the latter, I’ve been told by the LGPS that this amount “would enable [me] to count an amount of CARE pension of £1,117 per annum”. I’m awaiting a quote for the former. My normal pension age is 67 (I’m approaching 50), at which point the above would be payable.

Ask Money: who pays CGT on a designated account?

May 15, 2019

When our child was born, we set up a designated investment through Witan. Now he is approaching 18, we will shortly be transferring this investment across to him. Could you advise whether my partner or I need to declare anything on our tax returns when this is transferred, or will it all fall into his allowance for CGT?
David Griffiths, by email

Ask Money: estate planning or tax evasion?

May 13, 2019

My wife and I jointly own assets well over the inheritance threshold and wish to gift some of these to our children. Could we transfer these assets into my wife’s name, she being younger and in better health than me, and more likely to survive for seven years – or would HMRC view this as tax avoidance or evasion?
Raymond Dent, by email

Lindsell Train Investment Trust is on an 85% premium: why are investors buying?

Can you explain how Lindsell Train Investment Trust (LTI) can trade at a premium of 75% above net asset value (quoted on interactive investor’s website in mid-April)? Does this effectively mean investors believe the fundamental investments this trust has already made will be worth 75% more, within a reasonable timescale? Why would, or should, anyone pay such a premium?