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How to Turn Income Into an Inheritance Tax Break · Merryn Talks Money

0:02
Speaker 1: Bloomberg Audio Studios Podcasts Radio News Welcome to Merrin Talks
0:18
Speaker 1: Your Money, the personal finance edition of Merrin Talks Money.
0:21
Speaker 1: In these bonus podcasts, we talk about the best strategies
0:23
Speaker 1: for making the most of your money. I'm Merrin Somerset-Webb,
0:27
Speaker 1: UK money editor at large, and this week we are
0:30
Speaker 1: talking inheritance tax again. Next year, in April 2027, the
0:39
Speaker 1: IH2 rules will be changing again. And more pension pots
0:43
Speaker 1: will become eligible for inheritance tax. However, there are a
0:48
Speaker 1: few things that you can do to reduce your final bills,
0:53
Speaker 1: such as gifting cash to make things as tax efficient
0:56
Speaker 1: as possible. So first, we're going to have a little
0:58
Speaker 1: chat about the rule changes, and then we're going to
1:00
Speaker 1: talk about what you can do to reduce your final bill.
1:03
Speaker 1: With me today is Sarah Coles, head of personal finance
1:05
Speaker 1: at AJ Bell. Sarah, thank you for joining me.
1:08
Speaker 2: Well, thank you for having me.
1:09
Speaker 1: The point here is not really to talk about the
1:12
Speaker 1: changes to pensions and IHT next year, but it is
1:16
Speaker 1: important because it does mean that a lot more of
1:18
Speaker 1: people's assets are being pulled in to the IHT net,
1:21
Speaker 1: which means that more people will end up being liable
1:24
Speaker 1: for IHT in the first place.
1:25
Speaker 2: Is that right? Yes. And I think, you know, at
1:27
Speaker 2: the moment, a lot of people are looking at the
1:29
Speaker 2: different tax rules on pensions compared to other products. And
1:33
Speaker 2: as a result of thinking, well, maybe I'll spend my
1:34
Speaker 2: pension last. So I sort of try and keep hold
1:36
Speaker 2: of money in my pension because I know that it's
1:38
Speaker 2: going to be free of inheritance tax. Whereas now that
1:40
Speaker 2: completely changes. It's not just you've got to think about
1:43
Speaker 2: which thing to spend first, but also your estates can
1:46
Speaker 2: be much bigger in terms of inheritance tax. And there
1:48
Speaker 2: could be a much higher tax bill.
1:50
Speaker 1: Okay. So people are thinking, well, how do I get
1:52
Speaker 1: rid of some of this money? How do I give
1:54
Speaker 1: this money away? Gift it. I hate using gift as
1:57
Speaker 1: a verb, but everyone does now, right? So here we go.
1:59
Speaker 1: How do I gift it? away in such a way
2:02
Speaker 1: that I can actually reduce the bill because, of course,
2:05
Speaker 1: the seven-year rule stays in place, has been in place
2:08
Speaker 1: in the UK for yonks, that if you give it
2:10
Speaker 1: away and then you die within seven years, you still
2:13
Speaker 1: owe the money or you owe a percentage of the
2:14
Speaker 1: money it falls over the seven years, right? So you
2:17
Speaker 1: want to get rid of your money as quickly as possible,
2:19
Speaker 1: but you also don't want to end up broke and
2:21
Speaker 1: you don't want to lose control of your money. So
2:23
Speaker 1: people find themselves in a difficult situation. Obviously, you can
2:27
Speaker 1: just give all your money away, you're fine, but most
2:29
Speaker 1: people can't do that. So the thing I really wanted
2:32
Speaker 1: to talk about was this idea that you can give
2:35
Speaker 1: gifts from surplus income. And I think very few people
2:39
Speaker 1: really understand this rule. But if you are reasonably well off,
2:44
Speaker 1: you have a reasonable level of assets, this can really
2:47
Speaker 1: make a big difference, the seven-year rule. even included in
2:51
Speaker 1: the conversation, right?
2:53
Speaker 2: Yes, absolutely. So one of the things that really has
2:55
Speaker 2: happened over the years is, you know, you get sort
2:57
Speaker 2: of annual allowances of stuff you can give away. And
3:00
Speaker 2: because those annual allowances haven't changed for such a long time,
3:04
Speaker 2: they get pretty meaningless. You know, you've got sort of
3:07
Speaker 2: £ 3, 000 that you can give away or, you know, there's
3:09
Speaker 2: sort of 250 blobs you can give to various different people.
3:12
Speaker 2: But one of the rules that people, as you say,
3:14
Speaker 2: don't tend to know about is this gift from surplus income.
3:17
Speaker 2: And the idea is that if you give away money,
3:20
Speaker 2: now there's some rules that you have to follow in
3:21
Speaker 2: order for it to count as being surplus income. But
3:24
Speaker 2: you can give away as much as you like to
3:26
Speaker 2: as many different people as you like. And it falls
3:29
Speaker 2: out of your estate for inheritance tax purposes. So it's
3:31
Speaker 2: actually a really incredibly useful rule. Now, I say this,
3:34
Speaker 2: you know, obviously, whenever we talk about inheritance tax, it's
3:37
Speaker 2: really easy to get into the weeds really fast. But
3:40
Speaker 2: you do have to understand a little bit about what
3:42
Speaker 2: qualifies as a gift from surplus income. Once you've got
3:45
Speaker 2: that and once you follow all the rules about all
3:46
Speaker 2: the records and stuff you've got to keep, then it's
3:49
Speaker 2: just so useful in terms of being able to give
3:51
Speaker 2: money away.
3:52
Speaker 1: Okay, so what qualifies as surplus income?
3:55
Speaker 2: In terms of surplus income, you've got to be able
3:57
Speaker 2: to give this money away and maintain your standard of
4:01
Speaker 2: living as it is. Now, it's not just that. It's
4:05
Speaker 2: also actually got to be income. So you can't just
4:08
Speaker 2: sort of think, well, I'll just give away some savings
4:10
Speaker 2: and investments. It's got to be things like pension income
4:12
Speaker 2: or wages. It's got all sort of investment income. It's
4:16
Speaker 2: something that qualifies as income that's got to be given away.
4:19
Speaker 2: And the other rule is that you've got to give
4:20
Speaker 2: it away in a regular pattern. And people kind of
4:22
Speaker 2: get a bit confused about what that means because the
4:25
Speaker 2: classic example that you gave is kind of maybe you
4:27
Speaker 2: can pay grandchildren school fees, for example. That's a really
4:31
Speaker 2: clever way of doing it because you're giving away a
4:33
Speaker 2: regular amount of money at a regular time and it's
4:35
Speaker 2: very clearly a pattern. But lots of other things fall
4:37
Speaker 2: into that. So you could maybe make it Christmas and
4:39
Speaker 2: birthday presents. that also falls in because it's a regular
4:42
Speaker 2: gift is for, you know, the same purpose for the
4:44
Speaker 2: same person. It becomes a pattern. And so that's basically,
4:49
Speaker 2: you know, in a nutshell, what it, you know, what
4:51
Speaker 2: it takes to qualify for this role. Okay.
4:53
Speaker 1: Let's go back a little bit to this idea of
4:55
Speaker 1: maintaining your standard of living. So let's say, for example,
4:59
Speaker 1: that I'm a pleasantly well-off older person and I have
5:03
Speaker 1: a pretty good standard of living and lots of cruises
5:06
Speaker 1: and holidays and, you know, a nice house, all this.
5:09
Speaker 1: And then I think to myself, actually, You know, what
5:11
Speaker 1: they said on that Meron Talks Money podcast was really interesting.
5:15
Speaker 2: That's Sarah. She knows her stuff.
5:16
Speaker 1: So I think I am going to downgrade my standard
5:20
Speaker 1: of living. I'm going to live a much lower level
5:23
Speaker 1: life so that I can increase my surplus income and
5:27
Speaker 1: give more of it away. Do you see what I mean?
5:29
Speaker 1: It's very amorphous, this idea of what is your standard
5:32
Speaker 1: of living? How does your standard of living work? And
5:33
Speaker 1: when standard of living changes from year to year in
5:37
Speaker 1: some ways, it's quite amorphous. How do we nail that down? Mm-hmm.
5:41
Speaker 2: One of the great things about this rule is that
5:43
Speaker 2: there's lots of it that's not enormously clear that's been
5:46
Speaker 2: sort of laid out by HMRC. And the reason for that,
5:49
Speaker 2: I think, partly is because they don't want everyone to
5:50
Speaker 2: get terribly overexcited. But one of the things in terms
5:53
Speaker 2: of the records that you keep is you've got to
5:55
Speaker 2: keep a record of your income and expenditure. And so therefore,
5:58
Speaker 2: if they see a huge change in your expenditure, they'll think, well,
6:01
Speaker 2: this person's clearly trying to get around the rules and
6:03
Speaker 2: therefore it won't count. So they've never sort of, you know,
6:06
Speaker 2: sat down in black and white and spelled out exactly
6:09
Speaker 2: what counts as your standard of living. But you'll know
6:11
Speaker 2: from your own experiences how much you usually spend. And
6:14
Speaker 2: if you're going to cut back on that dramatically, then
6:16
Speaker 2: that's going to count as having eaten into your standard
6:18
Speaker 2: of living.
6:19
Speaker 1: OK, so they're watching you. They'll be watching you after
6:24
Speaker 1: you're dead, I guess. Okay, so that's your standard of living.
6:28
Speaker 1: And now we have this idea of what you can
6:31
Speaker 1: pay for and what you can't pay for. You can
6:32
Speaker 1: pay for your children's dog walking. You can pay for
6:36
Speaker 1: nursery fees. You can pay for school fees. You can
6:38
Speaker 1: give birthday and Christmas presents. As long as whatever you do,
6:42
Speaker 1: you keep doing, you do it regularly. That counts as
6:45
Speaker 1: a gift that comes out of this surplus income.
6:48
Speaker 2: Yeah. I would also say that, you know, the records
6:50
Speaker 2: bit of it is the bit that people will sometimes
6:52
Speaker 2: skip over. And that's when, you know, the person who
6:55
Speaker 2: is looking after your estate after you've died can run
6:57
Speaker 2: into trouble because they can think, well, it's pretty obvious
6:59
Speaker 2: I'm giving away birthday and Christmas presents. But actually, you
7:02
Speaker 2: really need to make a record of that. So you've
7:03
Speaker 2: got things like the gift, the date you made it,
7:05
Speaker 2: who it's to, where the money's coming from. and that
7:07
Speaker 2: sort of annual income and expenditure stuff. So all of
7:10
Speaker 2: that stuff is really important. And it can really help
7:13
Speaker 2: if you went on that record, you literally say, I'm
7:15
Speaker 2: doing this as part of the rule around gifts from
7:18
Speaker 2: surplus income. Okay.
7:19
Speaker 1: And also just be clear, because I know how much
7:21
Speaker 1: my listeners hate admin, you only have to keep those
7:24
Speaker 1: records going back seven years, right? Yeah. Because anything you
7:26
Speaker 1: gave away before the seven year period is automatically IHT free.
7:29
Speaker 1: So don't keep records that go back more than seven years.
7:32
Speaker 1: That's a waste of admin and a waste of paper.
7:35
Speaker 2: And I would definitely, the other thing I would do
7:36
Speaker 2: is I would go onto the HMR website and they
7:38
Speaker 2: will show you a template of how to keep those records.
7:40
Speaker 2: So you don't have to guess. Okay. That actually is
7:43
Speaker 2: pretty clear. They'll show you exactly what you need to
7:45
Speaker 2: put in those records and then just keep updating them
7:47
Speaker 2: every year. A glorious day when you get to sit
7:50
Speaker 2: down and work out everything you've spent and everything that
7:51
Speaker 2: you've given away. Brilliant.
7:53
Speaker 1: So if we want help avoiding tax, we can just
7:56
Speaker 1: go straight to the HMRC website.
7:59
Speaker 2: Yes, I'm sure they give you all the ins and
8:00
Speaker 2: outs of how to avoid payment.
8:14
Speaker 1: Okay, so the next bit to say is, okay, how
8:17
Speaker 1: do you create surplus income? Because as you said, you
8:19
Speaker 1: can't just give away chunks of capital. But as everybody knows,
8:23
Speaker 1: you can convert capital into income in all sorts of ways.
8:27
Speaker 1: So if you're looking at this and you're thinking, well,
8:29
Speaker 1: I don't have that much income, but I do have
8:31
Speaker 1: quite a lot of capital. How can I make that
8:33
Speaker 1: capital into income so I can create a surplus that
8:37
Speaker 1: I can then give away? That seems like the core
8:39
Speaker 1: question here.
8:41
Speaker 2: There's a number of different ways of doing it. And
8:42
Speaker 2: it depends on, I suppose, your attitude to things like risk.
8:45
Speaker 2: So if you're thinking, I absolutely cannot afford for anything
8:48
Speaker 2: to happen to the capital, then your primary route is
8:51
Speaker 2: going to be cash. So you're going to be thinking, well,
8:53
Speaker 2: I can save the cash. And I can give away
8:55
Speaker 2: the interest on that cash. Now, obviously, if you're doing
8:58
Speaker 2: it through a cash ISA, then you can do it
9:00
Speaker 2: all tax free. If you're doing it with savings account,
9:03
Speaker 2: you've actually got to think about, well, hang on, I
9:05
Speaker 2: have to factor tax into this when I'm working out
9:07
Speaker 2: how much I can afford to give away. And I
9:09
Speaker 2: have to be aware that that cash, because I'm not
9:11
Speaker 2: getting that interest, it will be eroded by inflation. So
9:14
Speaker 2: as long as you're happy with all those things, then
9:16
Speaker 2: cash is the sort of the capital protection option. Once
9:20
Speaker 2: you're prepared to take on a bit more risk, obviously
9:22
Speaker 2: you're looking at lots of different ways that you can
9:24
Speaker 2: then invest for income. So you've got things like UK
9:29
Speaker 2: equity income funds, which are a classic kind of way
9:31
Speaker 2: of investing for income. Now, again, obviously, you know, you
9:34
Speaker 2: are putting your capital at risk. It's worth saying that.
9:36
Speaker 2: But they tend, particularly in the UK, the higher dividend
9:39
Speaker 2: yields are quite, you know, it's quite a robust system
9:43
Speaker 2: within the UK. You know, there's a lot of companies
9:44
Speaker 2: that know that that's what their investors want. So you
9:46
Speaker 2: could get, you know, dividends of around 5%. Plus, obviously,
9:49
Speaker 2: you're looking for hopefully capital growth at the same time.
9:52
Speaker 2: So that can be a really useful route. Some people
9:54
Speaker 2: will look at international income funds. Now, they're also very strong.
9:58
Speaker 2: You have to bear in mind that not every country
10:00
Speaker 2: is as excited about dividends as the UK. So if
10:03
Speaker 2: you get somewhere like the US, which a lot of
10:05
Speaker 2: this money will be in, they're much more enthusiastic about
10:08
Speaker 2: things like share buybacks to return value. So you will
10:10
Speaker 2: get a lower dividend generally as a rule. Another option,
10:13
Speaker 2: of course, corporate bond funds. Now, obviously, corporate bond funds,
10:16
Speaker 2: they are so different. You know, you get all different
10:18
Speaker 2: types of corporate bond funds from the sort of, you know,
10:21
Speaker 2: the huge risk spectrum. So you need to be aware
10:23
Speaker 2: of where you fall on that risk spectrum. But you
10:25
Speaker 2: can get some pretty strong returns on those then become
10:27
Speaker 2: income that you can give away. So you've got all
10:30
Speaker 2: those different sort of investment options. In addition to that,
10:34
Speaker 2: you can look at your property because for a lot
10:36
Speaker 2: of people, you have a lot of assets. A lot
10:39
Speaker 2: of that is sometimes tied up in property. Now, it's
10:41
Speaker 2: obviously harder to produce an income from your property, but
10:44
Speaker 2: there are ways of doing it. So there will be
10:46
Speaker 2: people who, you know, got lots of spare rooms, don't particularly,
10:49
Speaker 2: I don't know, don't want to use half their house.
10:51
Speaker 2: And so therefore they can think about that sort of
10:54
Speaker 2: rent a room scheme that they can tax free rent
10:57
Speaker 2: a room as furnished room to a lodger and they
10:59
Speaker 2: can stay. And they don't have to stay there all
11:00
Speaker 2: the time. They can just be there for a bit
11:01
Speaker 2: of the time or you could Airbnb it when you're
11:03
Speaker 2: on holiday. But that money then becomes income that you
11:05
Speaker 2: can then give away. So your property is another option.
11:08
Speaker 2: And then there's the exciting world of purchased life annuities,
11:12
Speaker 2: which is super thrilling. And I can go into detail
11:17
Speaker 2: about those as well, I'm sure. But I don't want
11:19
Speaker 2: anyone to fall asleep. But basically, these are annuities that
11:21
Speaker 2: you buy that are not your pension annuities. So these
11:25
Speaker 2: are through you using your capital in order to buy
11:27
Speaker 2: an annuity. And one of the great joys of it
11:30
Speaker 2: is that actually it's counted as giving part of that
11:33
Speaker 2: income is counted as being a return of capital. And
11:38
Speaker 2: that portion of the income that you get is tax free,
11:40
Speaker 2: which is why a lot of people really like these products,
11:43
Speaker 2: because they can get sort of a partially tax free
11:45
Speaker 2: income from them. And, you know, you can get them
11:47
Speaker 2: as an income for life. So you can say if
11:49
Speaker 2: you expect to live a long time, you can say, well, OK,
11:52
Speaker 2: I will pay out this income for the rest of
11:55
Speaker 2: my life, knowing that I've got that opportunity to give.
11:58
Speaker 2: I could end up giving them more than I ever
12:00
Speaker 2: could have done if I'd actually just given them the
12:01
Speaker 2: money outright.
12:02
Speaker 1: Yeah, I mean, I like the purchase annuity idea because
12:05
Speaker 1: that means that the money that you take out of
12:08
Speaker 1: that that you give away, the bit that is tax-free
12:11
Speaker 1: because it's considered to be your capital already, that really
12:14
Speaker 1: is taken out of the tax net. Because one of
12:16
Speaker 1: the things about this, if you look at creating income outside, say,
12:22
Speaker 1: your ISA, for example, you create that income, let's say
12:25
Speaker 1: you're a 40% taxpayer. you create the income, you pay
12:29
Speaker 1: that 40%, and that's nice because you took it out
12:32
Speaker 1: of the IHT net, but the IHT bill on that
12:34
Speaker 1: would have been 40% anyway. So you're moving it out
12:37
Speaker 1: more quickly, but it's not necessarily as tax efficient as
12:41
Speaker 1: one might think because you're paying the income tax on it.
12:44
Speaker 1: The few bits that would make it very tax efficient
12:48
Speaker 1: is creating income from your ISA, which you do not
12:51
Speaker 1: pay income tax on, and passing that on. So that
12:55
Speaker 1: would be the first port of call creating ICER income
12:58
Speaker 1: and passing that on as quickly as possible, right? And
13:01
Speaker 1: then the second part is the purchased life annuity, because again,
13:04
Speaker 1: some of that allows you to pass on the capital
13:07
Speaker 1: outside both the IHT, the income tax and the CGT net.
13:11
Speaker 2: Yes, as ever, there's a small caveat to this one.
13:14
Speaker 2: So with your purchased life annuity, the bit that is
13:17
Speaker 2: considered to be the return of capital, you can't give
13:20
Speaker 2: that away. So you're kind of sharing the income with
13:23
Speaker 2: the person that you're giving it away. You can only
13:24
Speaker 2: give the taxable bit away because there's a whole business
13:27
Speaker 2: about not being allowed to give away capital. So therefore
13:29
Speaker 2: you can't give that chunk. But yeah. But same, same.
13:31
Speaker 1: I mean, once you have the money, which bit is
13:35
Speaker 1: which bit? Who knows? It's just money.
13:38
Speaker 2: They're just going to mark the notes or something. Okay. Interesting.
13:42
Speaker 1: And I suppose the final part of this question is,
13:47
Speaker 1: As far as the tax authorities are concerned, is it
13:50
Speaker 1: okay to make this effort to turn capital into income?
13:54
Speaker 1: Because we mentioned earlier that they'll know if you change
13:58
Speaker 1: your lifestyle so that your unspent income is higher. Will
14:01
Speaker 1: they also know and care if you adjust your finances,
14:05
Speaker 1: your investments, such that you're no longer looking for capital
14:09
Speaker 1: gains but looking only for income? Is that a problem?
14:12
Speaker 2: Is that allowed? Is that okay? That is totally allowed
14:15
Speaker 2: because they're not interested in how you use your assets
14:18
Speaker 2: for this particular joy of IHT. I would say there
14:22
Speaker 2: are some grey areas with this particular rule and pensions
14:25
Speaker 2: are one that's worth just very briefly dipping into because
14:30
Speaker 2: people will wonder if they can give away the tax-free
14:32
Speaker 2: cash on their pension.
14:33
Speaker 1: Yes.
14:33
Speaker 2: You know, I mentioned earlier that the HMRC doesn't always
14:36
Speaker 2: like to lay things out in black and white and
14:38
Speaker 2: this is one of the things that they've been very
14:40
Speaker 2: unhelpfully vague about. So it's not necessarily... the case that
14:45
Speaker 2: income for tax purposes is the same as income in
14:48
Speaker 2: these circumstances. So the way that they've said it is basically,
14:53
Speaker 2: usually or often, you can't just give away your tax-free cash.
14:57
Speaker 2: You would find it quite difficult to just take the
14:59
Speaker 2: tax-free cash from your pension, leave the rest of your
15:01
Speaker 2: pension in place and give the tax-free cash away and say, yeah,
15:04
Speaker 2: that's income. That would be very difficult for you to prove.
15:07
Speaker 2: Whether or not you can do it in other ways
15:09
Speaker 2: remains a little bit vague. So, for example, if you
15:11
Speaker 2: take one of these UFF plus kind of payments where
15:14
Speaker 2: you withdraw from your pension and a chunk of that
15:16
Speaker 2: is going to be considered to be your tax free cash.
15:18
Speaker 2: So it's tax free and a chunk of that is
15:20
Speaker 2: considered to be income and therefore it's taxed. Well, actually,
15:23
Speaker 2: within this environment, there's a decent chance that an UFF
15:26
Speaker 2: plus withdrawal could be considered as income. So it's kind
15:29
Speaker 2: of this weird gray area that your tax-free cash is
15:32
Speaker 2: counted as not being an income because it's distinct, except
15:35
Speaker 2: for where it's not quite distinct enough. And then they
15:37
Speaker 2: can sort of consider it to be income. Okay.
15:39
Speaker 1: I don't want to go down too many rabbit holes here.
15:43
Speaker 1: But why can you not yourself live off capital, at
15:49
Speaker 1: which point all of your income is surplus income? What
15:52
Speaker 1: if I, as a 65, 70-year-old person, decide that I
15:57
Speaker 1: will cover my personal expenses by selling 50 grams worth
16:02
Speaker 1: of my equities every year and living on that. So
16:05
Speaker 1: I am living on capital, which means that every single
16:08
Speaker 1: bit of income that I receive is surplus income. Can
16:11
Speaker 1: I give that all away?
16:12
Speaker 2: So the answer to all of these sorts of questions
16:15
Speaker 2: is it depends on your personal circumstances. So technically, you
16:20
Speaker 2: absolutely cannot be not taking an income and giving it away.
16:24
Speaker 2: But there will be circumstances under which you can dip
16:27
Speaker 2: into some of your own capital in order to live
16:30
Speaker 2: off it and give away your income. So there's definitely
16:35
Speaker 2: no right and wrong answer to that one. But it
16:37
Speaker 2: would be really a good idea to get advice because
16:40
Speaker 2: at this point, you're getting into the sort of the
16:44
Speaker 2: it depends area. And the it depends area is kind
16:46
Speaker 2: of a dangerous place to exist. I mean, there's lots of,
16:49
Speaker 2: you know, one of the other it depends areas, because
16:51
Speaker 2: you could say, well, what about income I've had over
16:53
Speaker 2: the past couple of years? You know, that surely stays
16:55
Speaker 2: as income and I can give that away. Well, technically...
16:59
Speaker 2: As long as it hasn't become capital, then you can
17:02
Speaker 2: do that. The problem is there's literally no definition of what.
17:05
Speaker 2: How would it become capital? So there's no definition of that.
17:10
Speaker 2: So once you get into these areas and you think, well,
17:12
Speaker 2: maybe I could do this, maybe I could do that.
17:14
Speaker 2: It's rather than taking a chance that, you know, you'll
17:16
Speaker 2: be one of these examples that you can get away
17:18
Speaker 2: with it. It really is worth talking to an expert
17:20
Speaker 2: because they can sort of, they know all the case
17:22
Speaker 2: law and they know, you know, decisions that have been
17:24
Speaker 2: made in the past.
17:25
Speaker 1: Yeah.
17:26
Speaker 2: I wouldn't cross your fingers and give it a go.
17:28
Speaker 2: I would definitely get some advice.
17:29
Speaker 1: Okay. So if you're doing this in a very simple way,
17:32
Speaker 1: you have more income than you can possibly spend, you
17:34
Speaker 1: give it away, you are fine. Keep close records. If
17:37
Speaker 1: you want to do something a little more complicated, you
17:40
Speaker 1: have a little trick up your sleeve, get financial advice
17:42
Speaker 1: before you start. Is that a fair summary?
17:45
Speaker 2: Yes, definitely. And I think there's also, you know, one
17:49
Speaker 2: of the things that you can find is if you're
17:50
Speaker 2: taking the DIY approach and doing something slightly unusual, it's
17:54
Speaker 2: one of those things that there's interpretations of the rules
17:58
Speaker 2: have been written down. You know, you speak to someone
18:00
Speaker 2: and they say, oh, I spoke to someone and they
18:02
Speaker 2: said I could give away a bit of my tax-free
18:05
Speaker 2: cash for my pension and that would count. And because
18:07
Speaker 2: there are some circumstances under which some of that is doable,
18:11
Speaker 2: that's the interpretation that that person's given. So I think it's,
18:14
Speaker 2: you know, if you're doing this, you might think, you know,
18:15
Speaker 2: I'm capable of doing my own research. I'll read around,
18:17
Speaker 2: I'll sort it out. You could end up even more
18:20
Speaker 2: confused at the end of doing all your research because
18:22
Speaker 2: you just need personalised advice. Okay.
18:25
Speaker 1: Absolutely brilliant. Sarah, that was incredibly useful. And I can
18:28
Speaker 1: feel all our listeners scurrying off to try and divide
18:31
Speaker 1: their income from their capital. So thank you so much
18:33
Speaker 1: for joining us today.
18:35
Speaker 2: Well, thank you.
18:41
Speaker 1: Thanks for listening to this week's Merrin Talks Your Money.
18:44
Speaker 1: If you like our show, rate, review and subscribe wherever
18:46
Speaker 1: you listen to your podcasts. Also be sure to follow
18:48
Speaker 1: me and John on X or Twitter. I am at
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Speaker 1: MerrinSW and John underscore Stepak. I would just say there
18:54
Speaker 1: are some accounts out there that are purporting to be
18:57
Speaker 1: me and are not me. So please do not buy
18:59
Speaker 1: any crypto coins from these accounts. Thank you. This episode
19:03
Speaker 1: was produced by Sam Asadi, Moses Andam and Jennifer Seeley.
19:06
Speaker 1: Questions and comments on the show and all our shows
19:08
Speaker 1: are always welcome. Our show email is merrimoney at bloomberg.net.