Your money queries answered by Peter Rutherford, chief executive of Rutherford Wilkinson plc, independent financial advisors. ********** Mr & Mrs W D from Alnwick write:
We have two children aged four and two. From last year, we have been putting money into a bond in order to provide funds to assist with private education when they reach the age of 12. We've been told by a friend that this may mean us having to pay inheritance tax. We are sure this can't be correct but we would like your reassurance. Answer:
Under the Inheritance Tax Act 1984 S.11 payments for the education and maintenance of children are exempt from inheritance tax where the donor is the parent. Where other gifts are made for the education of children, there may be a potential charge to inheritance tax, however, most gifts will fall within the annual exemption and normal expenditure out of income limits. ********** Mr & Mrs A M from Lanchester write:
Despite the stockmarket holding recent gains, we are still worried about putting money into investments which have no capital protection. We've noticed in previous Since You Ask columns that you have identified investments for readers which fit this category. Is there anything you can recommend at the moment? Answer:
Many companies are aware of the worries you have expressed and are offering investments with differing levels of capital protection. As an example, Zurich are launching a select guaranteed account (SGA) which aims to provide investors with exposure to 100pc of the growth in both the FTSE 100 and the Halifax House Price Index over a five and a half year term. The SGA is 100pc capital guaranteed and you can choose the mix of your investment in the two indices. As I say, this is just one example and you must speak to an independent financial adviser who can offer many other investments. ********** Mrs K K from Whickham writes:
I have two grandchildren aged seven and 10. I have about £1,000 I would like to invest for them (£500 each). What sort of investment could you recommend. Answer:
Children's Bonus Bonds from National Savings are attractive investments for children as they offer a relatively high rate of interest which is tax free. The term of the bond is until the child's 21st birthday and interest is accumulated within the bond. The interest rate is guaranteed for five years and after that time a new guaranteed rate is offered. The minimum investment is £25 and the maximum £1,000. With a maximum of £1,000 this would seem a safe home for the grandchildren's inheritance. ********** Investors Guide, incorporating A Guide to ISAs, is a booklet with information on all aspects of investment and available to readers. To apply for your free copy, freephone (0800) 074-5489 or write to me at Rutherford Wilkinson plc, 21-23 Bridge Street, Morpeth, Northumberland, NE61 1NT. Please also write with any queries you would like answered. Rutherford Wilkinson plc is authorised & regulated by the Financial Services Authority. | 
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