QA49 - Listener Questions, Episode 49

In this episode of the Meaningful Money Podcast Q&A, Pete Matthew and Roger Weeks answer six real listener questions on UK personal finance - from inheriting a SIPP (and the under-75 vs over-75 rules), to how inheritance tax could hit a property-heavy estate. They also discuss what to do with a large Employee Stock Purchase Plan (ESPP) holding, whether a longer 35-year mortgage can be a safer option, and the realities of financial planning for UK expats. Finally, they tackle a growing concern for many UK investors - how to protect wealth from increasingly sophisticated scams and impersonation fraud.

Shownotes: https://meaningfulmoney.tv/QA49 

02:04  Question 1

Hello Pete & Rog. Thanks for the wonderful podcast

I will keep it as brief as possible as it means hopefully you can squeeze more content for your listeners.

I am a 35 yr old renting in London with a salary of approximately 35k and would consider buying my own place if I could build up enough of a deposit.

My mum died a long time ago but my dad has just been informed that he has a medical condition which will probably end his life in the next 5 years or so. He is currently 73.

I don't have any siblings and my dad has shared with me the details of his assets which primarily comprise of a SIPP of around 200k (he has taken and spent his 25% tax free amount).

My question may sound a bit morbid but it reflects the reality of life unfortunately. It's about the rules of inheriting this SIPP. I'm not sure I fully understand the 'rules' about if my dad passes away before 75 or after he is 75.

My understanding is that if less than 75 I can just 'cash in' the 200k tax-free and for example use it as a deposit for a house. That seems straightforward. But hopefully he will get well past his 75th, so if that's the case I understand the 200k would be taxed as income, so I would be crazy to take it all out in that way.

So what would be my options in that case?
- Is there any way to take it out of the pension wrapper without having to pay tax to give a bit more flexibility?
- could I just inherit it as a pension and if so, would I still be able to take 25% tax free?
- can I draw down from before I reach pension age e.g. to pay the mortgage or rent (mindful not to go up into the next tax bracket)?

Have I got the rules right and are there any other options I could consider?

Regards, Steve

 

07:08  Question 2

Hi Pete & Roger

Love the content and just discovered your YouTube podcast!

I'm concerned about my wife parents (Mid 70s) inheritance tax liability and was wondering if you had any advice on how to structure the portfolio to reduce it or if it was worth considering a gifting strategy.

Primarily I'm concerned as the recent inclusion of pensions into IHT from 2027 and I'm pretty sure their estate is over 2m and therefore a reduced residence nil rate.

Rough figures are below:
Current house - 1.1m (according to Rightmove - jointly owned)
Own another house 800k (according to Rightmove - jointly owned)
Own a holiday letting business (retirement business) which has three properties circa 1.1m (according to Rightmove - jointly owned)
With this in mind I put their IHT liability at 2m+ without factoring their pensions

Questions
What do you consider the ball park IHT bill to be?
How do you suggest my wife (mid 30s) approach this issue? Or should she just deal with the cards as they lie in the future?
Tony

 

14:05  Question 3

Hi Pete & Roger,

I wanted to start with a thank you for your podcast - specially for acting as the friendly, inclusive and relatable voices of finance. The podcast is a welcome change to the scarier world of finance which many of us sometimes run and hide from!

My question for you is regarding my ESPP. I was employed by a US-based company around 10 years ago. During my time there I was able to sacrifice a percentage of my salary which was put towards the purchase of company shares at a discounted rate. It's a very effective scheme, and although my salary there was modest, I’ve been able to leave the shares alone which are now worth around £230k.

The predicament I now have is what to do with these shares. I’ve been happy to let the shares sit and grow, which they have been doing extremely well, though the value of them now has me wondering what my future strategy should be. For reference, the 10 year growth on these shares is around 850%.

As far as I'm aware, I’ll need to pay tax on these shares when it comes to selling them as there’s no way to transfer them into my stocks & shares ISA or similar. So it’s either leave them where they are, or sell some/all of them now and transfer the cash (after tax) into my stocks & shares ISA, SIPP or elsewhere.

I’m 40 and looking to purchase a house next year with my partner - though we don’t need these funds for that purchase. I have a stocks & shares ISA, a cash ISA and a SIPP, as well as a modest amount in a LISA and cash savings.

Whilst I don’t feel like I have all of my eggs in one basket, I do feel increasingly nervous about the value of the shares which are entirely dependant on the success of one company. That said, the returns to date have been incredible and I wouldn’t want to miss out on future growth.

I’d love to know if you have any guidance on this, and if there’s any factors that I haven’t considered yet.

Thanks again, Ian

 

20:36 Question 4

Hi Guys,

Love your podcasts. You've helped me a lot with understanding my finances and I'd love to ask a question.

My wife and I are 36 and have been back in the UK for 3 years. We are hoping to buy our first property in 2026.

Due to our age, is it okay and safer to do a 35 year mortgage and pay more off monthly to pay the mortgage off quicker? We aren't high earners but hoping to put any extra onto the mortgage principle.

Hope to hear from you.

Kind Regards, Dhiren

 

23:49 Question 5

Dear Pete and Roger

Thanks a lot for all the education and sensible insights you are providing to all

I am an avid listener of your podcasts and  watch your videos regularly.  Now I can see Roger as well.  Both very handsome and knowledgeable. Your discussions are lively and interesting.

I am also a member of the academy from the beginning. Also on Facebook community. Currently working my way through retirement guide.

I am working abroad for nearly 8 years. I was told by a financial planner that he can’t advise non UK tax payers as per regulations. Since then you have been my main source of information and guidance.

I am an Ex NHS consultant and now receiving pension. I have a very small SIPP and substantial Investment ISA which I can not contribute to. So my main investment is through GIA. All via Vanguard. Apart from this I have stocks and shares account with a couple of providers which helps me to keep thinking about investment opportunities. I am not a big risk taker and currently doing well with my stocks. I read and listen to a variety of educational materials to help with this

I have 2 questions. Is it possible to get financial planner help for UK citizens while working abroad?

What should I do with my investments before coming back to UK to live, for tax planning and reduce risk of huge tax for selling investments after coming back?

Currently I am in Middle East with zero percent income tax. My pension is also at zero percent under DTAA arrangements.

Sorry for long question. Thanks a lot again for your suuuuuuuuuper work. Continue great job

Kind regards, Sudhakar

Link: Perceptive Planning
https://www.perceptiveplanning.co.uk/world-citizens 

28:37  Question 6

Hi Roger and Pete,

Love the podcast. Thank you for everything. This is about to be a long question, for which I'm not at all sorry.

I've seen articles and videos about the increased sophistication of hacks and scams. Things like stealthily getting access to accounts and for years collecting information that can then be used to impersonate you to socially engineer access to bank accounts. AI plays a part in letting people change how they sound to make impersonating on calls easier than ever.

Going forward, I'm worried that one of the biggest threats to my wealth is not a market crash, but someone getting access to my investments through fraudulently calling support lines and impersonating me, or alternatively getting access to my money through 'traditional' password leaks and viruses.

To this end, I've been overpaying my mortgage as a way of having money locked away in an asset that cannot be liquidated without a solicitor (and hopefully more stringent checks of identity), but I'm going to be mortgage-free in less than 5 years at this rate.  My question is: Am I overblowing the risk here, and what are my options if I want to reduce the my risk from this perspective? I have considered:

- Having multiple S&S ISAs with different providers should mean that only a fragment of my portfolio can be lost through any one hack.
- Buying 'real' estate as an investment seems appealing from a security standpoint, regardless of expected returns, and although recent changes have made BtL less attractive, the old Rothschild saying of “Buy when there's blood in the streets" could mean that now might be a good time to buy. Is there an advantage in having overseas property as a wealth storage mechanism?
- Putting money in my DC pension pot will lock the money away until retirement, but suddenly becomes fair game to foul play once I do.
- Buying an annuity is not as fiscally efficient as drawdown, but is an attractive way of mitigating risk of losing it all to a scam caller. Especially if I'm old and doddery and more likely to fall for a scam.
- Buying physical gold (and a safe or a Swiss safety deposit box) doesn't appeal to me, but I have considered it.

Please assume that I'm being sensible with passwords and 2FA. My question isn't about basic IT security practices, but which of these decisions you think might be a good/bad decision and whether there's anything I haven't considered.

Thank you, Alex

Link: Cal Newport - https://calnewport.com/