QUESTION TIME

Your questions answered by an expert panel from Coopers & Lybrand

I am 15 years of age and interested in saving a small amount each month into stocks and shares. How can I best do this?

A unit or investment trust would be an ideal product for you to use. If you invest into a broadly-based general UK trust your savings will be invested across a range of British shares which will spread your investment risk.

Unit and investment trust managers usually offer a savings scheme with minimum amounts of typically pounds 25 per month.

As you are under 18, the savings scheme will need to be registered in your parents' names and recorded as held to your benefit. At age18, the plan may then be transferred into your name.

Will income from renting my home in Britain be taxed while I am overseas?

Rental income arising in the UK will remain taxable here even if you are not resident. But expenses can be offset against taxable income and you may also be entitled to claim personal allowances.

Expenses such as water rates, insurance, repairs and maintenance, agent's fees (including VAT), legal fees and mortgage interest are deductable from the gross rental income.

Most people will appoint an agent to manage the property. As you are residing abroad the agent (or the tenant if he pays you directly) is responsible for the tax and will usually deduct basic rate tax (currently 25 per cent) from the gross rental income as a tax reserve.

I have a holding of zero coupon preference shares. I thought this was a good investment, but recently I have seen press articles suggesting otherwise?

As you are probably aware, Zeros are an investment trust share that offer a fixed rate of return over a pre-determined period with a relatively low level of investment risk.

Zeros currently offer attractive returns which are taxed, for most people, in a very favourable manner. However, the Government had indicated that the tax treatment of Zero's was to be changed making them much less attractive to private investors. You will be pleased to know that the Inland Revenue has decided not to proceed with this proposal and zeros will therefore retain their tax-favoured treatment, at least for the present.

I have been made redundant after 35 years' service. As well as redundancy pay I was given an ex-gratia payment of pounds 30,000 which I thought would be tax- free. Now the tax office has asked for tax on it. What can I do?

The Inland Revenue issued a statement of practice in 1991 which broadly said that leaving payments above redundancy pay for someone fairly close to retirement would be treated as unapproved pension payments and so are taxable.

However, there is a get-out where you don't belong to your employer's pension scheme. If this applies, have a word with your former employer who may be able to apply for part or all of the payment to be tax-free.

I have a company car which other employees also drive sometimes, although I am usually allowed to take it home at night. A friend has told me that the car may be a pool car, which I should not be taxed on.

A car may qualify as a pool car if it is available and used by more than one employee; it is not usually used by any one of them to the exclusion of the others; there is only incidental private use; it is not usually kept overnight at the home of an employee. From your description the car is not a pool car and you will be taxed on the benefit.

I work for a building society that has offered to lend me some money at a rate of 5 per cent a year. Would this count as a taxable benefit?

The benefit will generally be taxable if you earn at least pounds 8,500 including benefits.

The assessable benefit will be the difference between the interest at the official rate of interest (at present 8 per cent) and the 5 per cent you pay. If your cheap loans total no more than pounds 5,000 no tax will be charged.

Readers should send their questions regarding financial and investment matters to our panel of experts at Question Time, Personal Finance Department, The Independent, 1 Canada Square, Canary Wharf, London E14 5DL. We cannot guarantee to answer all readers' questions but they will be sent to Coopers & Lybrand and a representitive selection will appear in Money each week.