Questions Of Cash: Help! I've just become a multi-millionaire
Saturday 23 July 2005
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; request a free guide on NISAs from Hargreaves Lansdown
- 1 Jeremy Clarkson 'sees no problem' with his racist language on Top Gear, says BBC
- 2 'Alien thigh bone' on Mars: Excitement from alien hunters at 'evidence' of extraterrestrial life
- 3 Richard Dawkins on babies with Down Syndrome: 'Abort it and try again – it would be immoral to bring it into the world'
- 4 London restaurant 34 creates champagne glass modelled on Kate Moss’ left breast
- 5 ALS ice bucket challenge co-founder Corey Griffin drowns, aged 27
Richard Dawkins on babies with Down Syndrome: 'Abort it and try again – it would be immoral to bring it into the world'
Scottish independence: English people overwhelmingly want Scotland to stay in the UK
Isis threat: Cameron wants an alliance with Iran
Michael Brown shooting: Chaos erupts on the streets of Ferguson after autopsy shows teenager was shot six times – twice in the head
Bin bag full of cats' heads discovered near Manchester's Curry Mile
Disgusting, frustrating, but intriguing: how the country really feels about its politicians
iJobs Money & Business
£30000 - £40000 per annum + benefits+bonus+package: Harrington Starr: C#.NET ...
£20000 - £30000 per annum + benefits+bonus+package: Harrington Starr: Junior D...
£550 - £650 per day: Orgtel: Business Analyst - Traded Credit Risk - Investmen...
£55000 per annum: Harrington Starr: A financial software vendor at the forefro...
Day In a Page
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony