Money

Our experts

Loans, identity and inheritance

John Husband

John Husband runs the Money clinic for Saga Magazine and has been writing about business and personal finance for 40 years.

John is on hand to answer your money queries. Here is a selection of your latest questions from the April 2008 edition of Saga Magazine:

Q: A good friend lent us £1,000 30 years ago. How much would that be worth now as we would like to repay him?

A: After allowing for inflation that’s equivalent to about £4,500 today. But if you wanted to pay him the interest it might have earned over that time as well, you’re looking at about £11,800.

Q: A friend of ours is having difficulty opening a bank account. She doesn't have a driving licence and she's never had a passport. All the banks she's tried say that without these documents they are not allowed to accept her as a customer. Can you help?

A: Certainly. The staff she has spoken to don’t understand their own rules. They need documents that prove who you are and where you live. Passports and driving licences are just examples of suitable documents. I suggest she ring the British Bankers Association, which should tell her what other documents will suffice. The number is 020 7216 8800.

Q: We want to give some money to our teenage grandchild to put in a cash ISA. Would this count against him when applying for student loans or grants if he goes on to university?

A: Any interest he receives on savings generally would count towards the household’s income if he applies for a student loan or grant. But not if the interest remains untouched in a cash ISA.

Q: My husband left everything to me when he died a year ago and I now have a house worth just over £300,000 and about £100,000 in savings. I thought the new rule changes would mean that we could jointly pass on £600,000 to our children without tax being deducted, but I've heard some financial experts say this is all spin and nothing has changed. I don't want to go in for any complicated tax planning if I can avoid it. Can you explain it all to me?

A: The basic rules remain the same with one key exception. Married couples can pool their £300,000 tax thresholds and jointly pass on up to £600,000 tax free to their loved ones. This applies equally to those who were already widows and widowers when the change was announced. So, in your case, your estate should not be liable to inheritance tax.

Q: I work part time at a local school and I've been invited to join its pension scheme. Is it worthwhile as I do only 18 hours a week and I am already in my early fifties?

A: Any pension is better than none given that most of us will live to a ripe old age, especially if your employer contributes to the scheme as that’s money you would not otherwise get. You’ll also attract tax relief on any contributions you make.

Q: We've been thinking about raising money on our home with an equity release plan but we are worried about who we can trust. Can you advise us?

A: Certainly. Either go to an independent financial adviser who can tell you the pros and cons of the different schemes and their providers. (Ensure that he or she holds the CF7 qualification – specifically for equity release advice.) Or you can call Saga on 0800 015 6256 to discuss its equity release service.

Q: Is it true that life insurance policies can help with an inheritance tax problem?

A: They certainly can. You can take out a life insurance policy that you put in trust to cover any expected inheritance tax bill. It can be particularly useful if you want to take advantage of the fact that anything you give away seven years before you die is exempt from tax and a sliding scale applies during those seven years. You can take out a policy that covers the potential liability just for those seven years. For more detailed advice on tax planning, talk to an independent financial adviser.

* John Husband answers your personal finance questions every month in his 'Money clinic' column in Saga Magazine. Read the full version of John's latest money Q&A on page 158 of Saga Magazine's April edition.

* Email John your personal finance questions at web.editor@saga.co.uk. John's opinions are his own and for general information only. Always seek independent financial advice.

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