Questions Of Cash: Help! I've just become a multi-millionaire


Q. My father, who was 78, and his young Australian wife were killed in an accident in Australia last year. I am his only child. He had lived in Australia for 13 years. I have been left over A$25m (£11m), which my father's Australian solicitor tells me is free of Australian tax.

I am 45, live in a rented flat, use a 15-year-old Nissan car, have no savings and survive on incapacity benefit. What should I do to retain the capital, while using the income to live on and purchase a home and good car?
GD, by e-mail.

A. You have promised us this is not a wind-up and your persistence in seeking advice persuades us this is genuine. Sensibly, you contacted the Australian Law Society to confirm that the person who contacted you was not having a joke at your expense, or undertaking some form of advance fee scam (obtaining an upfront payment on the promise of a large subsequent payment which never arrives).

While the bequest will give you easily enough money to provide you with a good standard of living for the rest of your life, the legacy may be subject to an inheritance tax liability of about £4m if your father remained a UK domiciliary, says Simon Edge of mfg solicitors' financial services. He recommends that to bring the funds back to the UK, you use a private bank, such as Coutts, which has experience in handling this type of sum and is used to dealing with overseas assets.

Edge suggests you consider placing some of the legacy on deposit. Coutts offers 4.58 per cent on its reserve account, while its Liquidity fund pays over 5 per cent. If you opt not to use a private bank, Citibank pays 4.59 per cent on its current account, while Investec Bank pays 5.05 per cent on its direct reserve account. You will pay 40 per cent income tax on much of this interest; so, to reduce this, you should consider an ISA, venture capital trusts and enterprise investment schemes - though you should be aware of the risk associated with VCTs and EISs. Capital investment bonds are another possibility. You should engage an IFA to advise on this and possible direct investment in shares and stocks.

Q. How long should I keep bank and credit card statements, receipts, utilities bills and so on? I am awash with pieces of paper.
HO, by e-mail.

A. Your legal responsibility is to keep financial papers related to your recent tax returns. How long you need to keep these depends on whether you are self-employed or employed. An employed person should retain their P60 for at least 22 months after the end of the relevant tax year. A person who is or was self-employed must retain records for at least five years from the January after the tax year for which the tax return has been submitted. To give yourself a margin of safety and taking into account that a person's trading year may differ from the tax year, it would be sensible to keep financial papers for at least eight years.

Information relating to assets which may generate capital gains or losses - such as contracts and related correspondence - should be retained longer, and it may be wise to keep this indefinitely.

People whose tax returns are subject to investigation must keep records for several years after the investigation has been completed. Old bills, bank statements and credit card statements should be kept while they may be relevant. Receipts for expensive goods that might be subject to warranty claims should be kept for at least a year, with related financial records such as credit card statements. Other receipts, where they do not affect your tax liability and where there is no longer a possibility of a dispute, can be thrown away, but keep contracts for continuing services such as mobile phones.

Q. My daughter has just turned 17 and hopes to go to university. We want her to open a bank account for earnings from a weekend job and our allowance. She has a building society account but wants a chequebook and debit card. I have approached two banks, but they only offer current accounts and both say student accounts are only open to people over 18.
JB, by e-mail.

A. The Co-operative Bank's children's account has a debit card but no chequebook and pays a minimum of 4 per cent on deposits. The Co-op's current account - available to 17-year-olds - has a chequebook and debit card, but does not pay interest. Your daughter could open a Halifax Cash Card account, an interest-paying current account which comes with a debit card, but no chequebook, and pays 1.51 per cent.

This could be combined with Halifax's Web Saver account to provide 4.9 per cent on deposits before they are transferred into the Cash Card account. Nationwide offers a children's account that pays 4.95 per cent and comes with a cash card, but no debit card or chequebook. A 17-year-old can apply for a Nationwide current account, which comes with a chequebook and debit card, but this pays only 0.5 per cent interest and will only be opened subject to credit-scoring approval.

Money laundering regulations can cause difficulties in opening a first account and the Co-operative Bank appears to adopt a stricter interpretation of the rules than Nationwide.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Digital Optimisation Executive - Marketing

    £30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...

    Recruitment Genius: Financial Reporting Manager

    £70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...

    Recruitment Genius: Payments Operations Assistant

    £23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

    Recruitment Genius: Telephone Debt Negotiator

    £13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

    Day In a Page

    Syria civil war: Meet the military commander who says his soldiers will not rest until every inch of their war torn country is free of Islamist 'terrorists'

    ‘We won’t stop until Syria is back to normal’

    Near the front lines with Islamist-controlled towns where Assad’s troops were besieged just last month, Robert Fisk meets a commander confidently preparing his soldiers for battle
    Fifa corruption: Strip Qatar of the World Cup? Not likely

    Strip Qatar of the World Cup? Not likely

    But if a real smoking gun is found, that might change things, says Tom Peck
    Twenty two years later Jurassic Park series faces questions over accuracy of the fictional dinosaurs in it

    Tyrannosaurus wrecked?

    Twenty two years on, Jurassic Park faces questions over accuracy
    The inside story of how Bill Clinton built a $2bn global foundation may undermine Hillary's chances

    The inside story of how Bill Clinton built a $2bn global foundation...

    ... and how it may undermine Hillary's chances in 2016
    Genes greatly influence when and how many babies a woman will have, study finds

    Mother’s genes play key role in decision to start a family

    Study's findings suggest that human fertility is still evolving
    12 best olive oils

    Extra-virgin, cold-press, early-harvest, ultra-premium: 12 best olive oils

    Choosing an olive oil is a surprising minefield. Save yourself the hassle with our handy guide
    Rafa Benitez Real Madrid unveiling: New manager full of emotion at Bernabeu homecoming

    Benitez full of emotion at Bernabeu homecoming

    There were tears in the former Liverpool manager’s eyes as he was unveiled as Real Madrid coach. But the Spaniard knows he must make tough decisions if he is to succeed
    England can win the Ashes – and Elvis Presley will present the urn

    England can win the Ashes – and Elvis will present the urn

    In their last five Test, they have lost two and drawn two and defeated an India side last summer who thought that turning up was competing, says Stephen Brenkley
    Sepp Blatter resignation: The beginning of Fifa's long road to reform?

    Does Blatter's departure mean Fifa will automatically clean up its act?

    Don't bet on it, says Tom Peck
    Charles Kennedy: The baby of the House who grew into a Lib Dem giant

    The baby of the House who grew into a Lib Dem giant

    Charles Kennedy was consistently a man of the centre-left, dedicated to social justice, but was also a champion of liberty and an opponent of the nanny-state, says Baroness Williams
    Syria civil war: The harrowing testament of a five-year-old victim of this endless conflict

    The harrowing testament of a five-year-old victim of Syria's endless civil war

    Sahar Qanbar lost her mother and brother as civilians and government soldiers fought side by side after being surrounded by brutal Islamist fighters. Robert Fisk visited her
    The future of songwriting: How streaming is changing everything we know about making music

    The future of songwriting

    How streaming is changing everything we know about making music
    William Shemin and Henry Johnson: Jewish and black soldiers receive World War I Medal of Honor amid claims of discrimination

    Recognition at long last

    Jewish and black soldiers who fought in WWI finally receive medals after claims of discrimination
    Beating obesity: The new pacemaker which helps over-eaters

    Beating obesity

    The new pacemaker which helps over-eaters
    9 best women's festival waterproofs

    Ready for rain: 9 best women's festival waterproofs

    These are the macs to keep your denim dry and your hair frizz-free(ish)