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Where should I save/invest up to £30k?

by RBLeeds 07 January 2010 |

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My parents have some spare money and want to pass some to me now to use rather than waiting, hopefully a long time, to inherrit. I understand the £3k each per year free of IHT, but my question is where am I best to keep this money? It would continue to grow yearly towards a total figure of £30k - I don't plan to take any out until the total is needed. They may well give me the remainder if I buy a house before the multiple £3ks get to the total but we were hoping to move some across to me to reduce the potential taxes later.

Any advice is very welcome.

Thank you

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804

MikeGG1 posted
On the IHT side, they can each do £3,000 per year but, if they didn't do anything last year (2008/09) then they can double up this year.
This means that they could, between them, give you £6,000 today for 2008/09, £6,000 tomorrow for 2009/10) and another £6,000 on 6 April for 2010/11, totalling £18,000 within a short period. Another 2 years would see you at the £30,000 mark, free of IHT, whereas, if they paid the £30,000 now, it would take 7 years to be clear of IHT. I would go for the instalments, especially as it would be half up front anyway.
If the purpose for it is to be used as a deposit before too long then you should go for fixed rate deposits of an appropriate term. Round the term down rather than up in case you want it earlier.
£3,600 should go into an ISA and the remainder of the initial £12,000 should go into non-ISA deposits.
The April and subsequent instalments should go into ISAs to the maximum allowed at the time and the rest into non-ISA deposits. Currently, we are expecting the Cash ISA level to be £5,100 next year, so that would only leave £900 non-ISA.
I have assumed that you are under 50. Otherwise it would be £5,100 this year as well.
I have not recommended Equities in view of your intended house purchase.
Mike

Posted on 07 January 2010 | Love 0 loves Report
272

Swarbs posted
You can consider drip feeding some of it into regular savings accounts. These are where you commit to save a certain figure per month (up to £250), and receive a higher rate of interest in return. I think Halifax is currently offering around 4.5%. In addition, by putting the money in a fixed term bond you can get rates of above 4% and potentially higher than 5%. These may be better than a Cash ISA if you definitely plan to use the money to buy a house in the future.
Try here:
http://www.moneysupermarket.com/savings/
and select 'fixed term bonds' and 'regular saver' from the top menu.
Posted on 07 January 2010 | Love 0 loves Report
804

MikeGG1 posted
12-month fixed rate monthly savers are the best short term rates around.
Halifax seem to have dropped out of that market. The highest is Norwich and Peterborough at 5% but you need dependent children for that. After that you have Chorley BS which is restricted to £150 per month average, Stroud & Swindon restricted to £250 per month both at 4.5%.
I reckon the best is Principality BS which allows £500 per month which matches the £6,000 per year that can be transferred without IHT. That is also 4.5%.
Mike
Posted on 07 January 2010 | Love 0 loves Report
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RBLeeds posted
Thank you both. You've given me some great ideas for where to start looking.
Posted on 12 January 2010 | Love 0 loves Report

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