Your money queries are answered by Peter Rutherford, senior director of Rutherford Wilkinson Ltd, independent financial advisers.
Jul 4 2009 by Iain Laing, The Journal
Q I am now retired and a non-taxpayer. However, I have some stocks & shares ISAs and have noticed in a recent statement that there has been some tax charged on interest received. Can I claim this back?
A The ISA rules state that cash may be held in an ISA but only in the short-term or only a reasonable amount simply to cover charges and expenses. Any excess will generate interest, which is taxed at a flat rate of 20%. HMRC do not count this as the income of the investor and therefore you are unable to recover the tax paid. A higher rate taxpayer would not be liable to any additional tax.
Q I have recently taken out an interest only mortgage to keep my costs down. However, my wife and I have a young daughter and I would like to know what protection you would recommend? I am the only earner in the family.
A Clearly, cost is of an issue, but the first thing you must do is ensure that the mortgage is cleared in the event of your death. The cheapest way of doing this is to have a level-term insurance for the amount and the term of the loan. I would then recommend that you and your wife are jointly insured with a family income benefit that would provide the survivor with additional income while your daughter is growing up. This is very cheap to put in place.
You should also consider protecting your income from accident or illness and I strongly recommend that you talk to an independent financial adviser.
Q I have heard that venture capital trusts are very attractive. Could you please confirm this?
A VCTs are designed to encourage individuals to invest indirectly in a range of smaller high-risk trading companies whose shares and securities are not listed on a recognised stock exchange. The tax reliefs are very attractive, with income tax relief at the rate of 30%, and you may not have to pay capital gains tax on any gain when you sell your VCT shares. You can also invest earlier capital gains that you may have made from selling a property or business etc and defer paying capital gains tax on this money.
But you have to remember that the underlying investments are likely to be relatively volatile.
To request a free “Investor’s Guide” and with any questions you would like answered please contact me at Rutherford Wilkinson Ltd, Northumbria House, 21/23 Brenkley Way, Blezard Business Park, Newcastle upon Tyne, NE13 6DS. Website www.rwpfg.co.uk. Telephone 0191 217 3340 or email peter.rutherford@rwpfg.co.uk
Rutherford Wilkinson Ltd is authorised and regulated by the Financial Services Authority.
