L&G Closing my investment account

[shesalright]

Hi All

I've had an investment account with L&G for 15+ years which started as a 10K GBP deposit and then paying 600 GBP month into it. I now have moved overseas (which is why I don't have an ISA) and I probably won't come back to the UK after retirement. (I'm 50).

L&G have written to me to tell me that my investment account needs to close at the end of the year and I have until March 24 to move it. I'm not really sure what to do with it without incurring a large tax penalty. It's worth >225K now. I don't have a financial advisor - do I need one? I was thinking of just transferring it to a different investment account until I retire but would a SIPP be better?

I'm not an active investor, I have just been saving money every month and putting it in tracker funds - something I'd be happy to continue doing until 67.

Any good advice?

 

[sashieng]

@shesalright I assume they are closing it because you are no longer resident in the UK?

You cannot simply move it in to a pension as you sound like you may (unknown) have not been resident in the UK for a number of years; after a period of time abroad you can no longer contribute to a UK pension. And even if you could you have no pensionable earnings in the UK, and might be limited to only £3600 gross contribution limits each year.

Lots of 'mays' / 'might' etc above because the devil is in the detail.

You could look at transferring to Interactive Broker, as they support accounts across a number of countries. If you are able to do this, it would defer your issue for now.

 

[arianaj21]

@shesalright If you’ve worked in U.K., then Use some to top up your national insurance shortfall so you’re entitled to a full uk state pension upon retirement at 67.

You might be able to stick it in a private pension of £60k per year, with entitlement to draw pension at age of 57+ of 25% cash withdrawal and then rest in an annuity where cash is issued back to you upon the age of death.

As for other money:

stick in a general investment account and then buy stocks/funds/etf, etc.

At present, the U.K. saving rate on current and fixed saving accounts can yield in interest around 4% to 6%. See if you could open an account to yield this return.

How did they find out you was not a U.K. resident?

 

[brokenwithout]

@shesalright It depends on where you moved to. If you are currently resident in the US most UK firms won't accept you as a new investment client. There are a few, but not many.

A similar situation if you live in Europe, but at least if you approach a firm and they make no effort in marketing to you there are rules to allow you to open an account.

Putting money into a SIPP doesn't accomplish anything, as ignoring the contribution limitations, you would have to sell your investments for cash thereby incuring capital gains tax before transferring into the SIPP. I'm assuming the big tax liability is capital gains that you are wanting to avoid.

You could try some of the online platforms, or you could try some of the wealth management firms - the benefit of the later being an employee will tell you quickly if they'll accept you and if so can jump through all the account opening hoops for you.

There is also the option of just paying the tax, and transferring the money to wherever you are in the world - after all if you've no intention on returning to the UK do you really want the hassel of managing an investment pot in another country?

 

[lytre]

@shesalright What tax do you have to pay?

Does the jurisdiction where you are now resident have the equivalent of UK CGT? There is no non-resident UK CGT on stocks & shares, only on real property, at least as I understand it.

At the end of the day, though, you were always going to have to sell the investment at some stage (presumably you dont want to take these shares to the grave) and always going to incur a CGT charge on the gain, whether you were in the UK or overseas, so you're not really any worse off from paying the CGT now (except that you won't be able to spread your sales over a number of years if your jurisdiction has CGT allowances).