I'm unemployed (after 40 years working - but not claiming ANY state benefit - my wife still has a job thank G), and I will soon receive a modest inheritance. As I don't pay any tax (as I'm not earning anything), is there any point in investing the inheritance monies in tax free investments - such as ISA or Savings Certificates?
Also, do I have to pay tax on any non-tax-free(!) investments, given that the interest from such investments will be less than my personal allowance (ie is tax on investments independent of personal tax allowance)?
Only in so far as they may offer you a higher interest rate, plus what you stuff in an ISA now will be tax free in future - remember you can only stuff away 3k/year as cash (going down shortly), and one day you may have a pension and be paying tax having a 'filled up' (mini cash) ISA (and another for your wife) is a good plan, if you have the cash available.
Depends on the investment. If you stick to things which pay interest, then you can get any tax back - better yet you can fill in the R85 form and get interest paid gross (no tax deducted). If you want to talk about shares which pay dividends, then you can't get the tax deducted back (although if you crept into the 40% tax bracket the government would expect you to pay the extra). In your position I'd think pretty carefully before investing in shares anyway, unless you have some reason to lust after long term capital growth.
Thanks very much for that GSV - much appreciated. Just to follow up on that last point...
I'm thinking of putting most of the money into short term (1 year) bond(s), purchased via the bank. as they mention the R85 you pointed out. So the personal tax allowance is *not* just applied just to "Earned income from employment". The bloke down the pub :-) seems to think is it - which seemed mighty odd to me. I'm also trying to decide whether I should classify myself as retired - or unemployed (unemployable) (sigh).
Two points on that .. make sure you won't need the money before the year is up (or you'll get screwed), and make sure the rate is enough higher than a 'variable rate' account to make up for the risk that rates will rise once or twice, or even three or more times over that year. If you want to peruse what is on offer,
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(although I haven't been there for a while, so it may have moved).
Blokes at pubs can usually be relied upon for data on the quality of beer. Not the best place to ask financial questions. 8>.
Call yourself whatever you like .. there's no legal requirement to admit to retired or unemployed. 'Resting' is OK too. fwiw, if you are over 60, the government will kick in any required NI contributions (if you are not working). If you are under 60, you might want/need to pay class3 N in order to preserve your rights to a full pension. The nice people at Newcastle can tell you, along with giving you a (state) pension(s) forecast. Well worth it . form (BR19? iirc) available online.
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