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DEAR TRICIA.

Byline: Edited by TRICIA PHILLIPS

Q My son is saving into a Help to Buy ISA and now wants to open a Lifetime ISA as he can save a higher amount into one of those each year. Can he save into both and earn the government bonus?

A You are allowed to have a Help to Buy ISA and a LISA but you cannot get the first-time buyers bonus from the Government on both accounts. Your son could transfer his Help to Buy ISA balance into a LISA. If he does this before April 5 his current balance will not count towards this tax year's PS4,000 LISA allowance. But he must move quickly as it can take a while to process.

Q I have two small annuities paying less than PS400 each year. I contacted my pension firm about taking a lump sum payment through the trivial commutation rules. I've have been told this isn't possible. Do you have any advice?

A Unfortunately, you cannot go back and use the small pot rule with a pension annuity that is already in payment. It's possible you may have been able to before you purchased the income, but not now.

Q Are there any tax implications in giving our children lump sums towards the deposit for a home? I've read that you can only give up to PS3,000 a year as gifts.

A In reality, you can gift as much as you like, but anything over your annual gifting allowance for inheritance tax purposes will become a potentially exempt transfer, and the seven-year rule applies before the gift falls outside your estate.

Q I work freelance in the building trade and firms deduct a percentage of my wages for tax. Does it mean I don't need to do a tax return?

A It sounds as if you're under the Construction Industry Scheme (CIS) where a contractor deducts money from your pay and sends it to HMRC. These deductions count as advance payments towards your tax and National Insurance. But at the end of each tax year you should send in a self-assessment tax return.

Q I asked my pension firm for the 25% tax free lump sum out of my savings. They said it wasn't worth transferring and have offered me a PS10 a week annuity. Have I got any other options I could explore?

A I'm not exactly sure what type of pension you have to be able to answer correctly. It could be that the scheme you are in is an older type of pension and does not allow much flexibility. You may be able to transfer your saving out to a more flexible scheme and withdraw the cash under the pension freedoms. But, it may be that it will cost too much for advice to transfer if it's a small pot.

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Publication:The Mirror (London, England)
Date:Feb 28, 2018
Words:474
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