Tax on savings.

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I lost my wife to Bowel cancer 16 months ago. We have 2 small children who were aged 5 and 3 at the time. We had Life Insurance in place ( I took it out thinking it would benefit Laura if I were to pass away given I have lost my dad and sister to cancer - I never, ever thought I would lose Laura first).

The insurance company paid out the lump sum (tax free) which I then invested in various places with the help of an advisor for short term and also longer term for our boys. 

Laura and myself both worked full time but since her passing I have had to drop down to part time hrs and reduced number of days to look after the boys.

I wanted to check something regarding finances if anyone can help please? 

My new hours mean I am below the higher rate tax bracket and I am able to claim child benefit (I was able to claim bereavement support but that is now coming to an end after 18months).

However I now understand that because I receive interest on my savings I have put away I am now going to go into the higher tax bracket which means I now have the child benefit wiped out (the higher rate means you lose it) (or not claim the payments), I now pay tax on the interest I receive from the tax free life assurance which then contributes to my PFA. It seems the gov get you either way for tax.. 

I'm losing the bereavement support, I can no longer claim child benefit and I have to pay tax on my savings (the life policy payout) all because I want to put money aside for our sons future and I want to save if anything were to happen to me). because it takes me above 50K a year.. all this on top of a reduced salary and hours. I do appreciate 50k is a lot of money but when mortgage rates are what they are along with the cost of living.. you lose a partner and their salary, you have two small boys to raise alone and the gov think 18 months is long enough for you to receive financial help and then take your child benefit from you and tax your savings on top... just all seems a little unfair to me? 

Does anyone else find you seem to get penalised by tax as soon as you think you are getting straight.?

Thanks

  • Hello  

    Thanks for getting in touch.

    I’m sorry to hear about your wife and some of the challenges you’ve faced.

    It might be worth getting some financial advice regarding your tax situation. We can’t offer Financial or Tax Advice, but I’ve added a couple of signposts below which you might find useful.

    Finding a Financial Adviser


    You can find an adviser by asking family and friends for a recommendation or by visiting: www.findanadviser.org/find-an-adviser.aspx

    Tell the adviser what’s needed e.g., advice on tax. The Financial Adviser should arrange a meeting to discuss these needs and do a fact-finding exercise (this is where they ask questions about finances and personal situation). Their next step is to research options and put together their recommendation.

    MoneyHelper also have some useful websites and tips for choosing a Financial Advisor. Please access the link below for more information:
    https://www.moneyhelper.org.uk/en/getting-help-and-advice/financial-advisers/choosing-a-financial-adviser

    When choosing a financial adviser; always check that they, and the company they work for, are authorised by the Financial Conduct Authority (FCA).

    It’s possible to check individuals and companies on the FCA register:
    https://register.fca.org.uk/s/

    To speak to the FCA directly, phone 0800 111 6768 from 8am to 6pm, Monday to Friday (except public holidays), and 9am to 1pm Saturdays.

    MoneyHelper also have some articles covering the topics you mention regarding Child benefit for people earning above £50,000 and tax on the interest you earn on your savings. You can read more about this in the links below.

    How to claim Child Benefit

    Changes to Child Benefit

    Tax on Savings and Investments

    Additionally, our service provides help and support on a number of areas like mortgages, banking, pensions, debts and estate planning and we’d be happy to talk through some of these areas if you’d like. If you have any further questions, please don’t hesitate to get in touch

     I hope this helps you but if you need any more help please do let me know or call the Macmillan Support Line (freephone) on 0808 808 0000.

     

    You can respond by replying via this email or alternatively you can also talk to us via our webchat service.

     

     

    Kind regards.

    Will

    Financial Guide

  • Thank you Will that’s great advice with useful links. Thank you, it’s very much appreciated.