DEAR TRICIA
Need some practical financial advice? YOUR MONEY Editor Tricia Phillips and her team can help
Q My husband has been drawing his state pension and private pensions for a year now, and I will be taking mine in the next year. He thinks this will affect his pension and the tax we pay. Will my pension be taxed separately?
A Your income from all sources is individually taxed on anything over the personal allowance which is £11,850 for this tax year. The income you earn will not affect the tax your husband pays. Perhaps he’s getting confused by the Marriage Allowance – where you have transferred part of
your personal allowance to your husband to help reduce his tax bill.
Q Despite both my wife and I working, we struggle a little financially. I’m wondering if investing in a cryptocurrency such as Bitcoin, or maybe company shares, would help generate extra income for us?
A Investing to raise money for everyday living costs would be a risky option. Investments go down as well as up. If you are already struggling can you really afford to put any of your money at risk?
Q My mum is 99 years old and wants to give a small amount of money to each of her three daughters. She wonders whether this would have any tax implications now or in the future.
A It all depends on the total amount of the gift she gives away, and if her estate is potentially liable for inheritance tax.
However, she is allowed to gift £3,000 per year in total without any issues, and can go back one year if she has not already gifted cash in the previous year.
Q My husband and I have money in an investment bond and when we make withdrawals we are taxed on the amount we take out. What we cannot understand is that we paid tax on the money we invested, so why do we pay tax every time we make a withdrawal?
A
This is because you are withdrawing over and above the 5% per year you can take without triggering any immediate tax liability. However, even under the 5% threshold that tax is in effect only deferred. When the bond is fully cashed in, withdrawals will be added to any profit you may have made, and
will be taxed as income in that tax year, based on your tax status.
Q
Is it still worth looking around for a new energy tariff when my deal comes to an end in the next month? I won’t be using as much energy over the summer so I wondered if it was still worthwhile?
A
Yes, it could be worthwhile, especially as some suppliers have just hiked up their prices. If you don’t do anything you will automatically be put on to your supplier’s standard tariff – these are the most expensive and you could end up paying over the odds for your energy.