Your questions answered by an expert panel from Coopers & Lybrand

I have a number of stocks and shares, some of which I inherited from my parents. I want to continue investing in shares but I find all the different vouchers for the dividends quite cumbersome to deal with on my tax return. Should I consider unit trusts?

Aunit trust is a collective investment scheme. It invests in company shares and generally holds between 50 and 100 shares within the trust. An advantage is that unit holders are not bothered with acquisitions, disposals and the individual dividends received by the trust.

The only paperwork for individuals relates to dividend distributions made by the unit trust, usually two a year, and for acquisition and disposal of the unit trustholding itself.

Unit trusts can be a very sensible way of spreading risk for small shareholders, particularly for those who do not want to regularly buy and sell shares themselves. However, you do have to look carefully at the charges levied by the unit trust manager.

Another advantage of the unit trust over individual equities is that you do not need to calculate the capital acquisition and disposal details when the manager buys and sells shares. Many people see this as a good way of avoiding ongoing capital gains tax (although the annual capital gains tax exemption which is currently pounds 6,000 per person per annum is enough for many small shareholders).

Five years ago, I signed a bank guarantee in favour of my son to help him establish a business. I gave the bank a second mortgage on my house. I never heard from the bank until recently, when I learned the overdraft was much more than I thought. The bank wants me to pay the debt. Do I have any defence?

It is not uncommon for relations to help each other out in this way and the bank is entitled to assume your son will tell you of any problems regarding the account. He is their customer, not you, and bank confidentiality requirements alone mean you will not automatically be informed of developments unless the guarantee is called in. Assuming the guarantee was not limited in amount, it is between you and your son if the debt is more than you anticipated.

If the guarantee complies with all normal formalities, you probably have no defence to the claim. However, you might be able to resist any claim by the bank to possession of your home. This will depend on whether you took independent legal advice before signing the guarantee, and whether the bank invited you to do so at the time. You will need to be legally advised on this point.

As a general rule, the last thing the bank will want to do is sell your home and it is important that you enter into a constructive dialogue with them as to how the debt may be dealt with.

I am five years from retirement but have changed jobs so often that my pension will only be a quarter of my final pay. Should I pay additional voluntary contributions?

Additional voluntary contributions (AVCs) are generally seen to be an attractive way of saving for retirement because the contributions are tax deductable at your marginal rate and the investments are free of income and capital gains taxes. But remember that the Inland Revenue claws some of this back; the pension itself is ultimately taxable. The other drawback is that AVCs are not accessible if funds are needed for, say, school fees or medical expenses.

You should look at AVCs as just one item on the retirement savings menu. Looked at purely from a tax perspective, TESSAs, PEPs (for 40 per cent taxpayers) and certain no-frills National Savings products can give a return as good as that from AVCs as well as greater accessibility.

My TESSA comes to the end of its five-year term in January next year. My total investment is pounds 7,000, of which about pounds 1,000 is accrued interest. If I assume that nothing else is added to or taken away from the account between now and January, are you able to tell me how much I can transfer into a new TESSA?

The Tax Exempt Special Savings Account (or TESSA) is a five-year investment and legislation now allows the TESSA to be rolled over at the end of the five years. The rules are that the capital invested in the TESSA can be rolled over into the new TESSA as the basis of the first year's investment. You will then be able to make investments of up to the normal maximum annual amount in subsequent years until you have invested total of pounds 9,000 overall.

The interest accrued on the TESSA will therefore have to be invested in another place until Year 2, when it could be used to top up the new TESSA. Only the pounds 6,000 of capital (pounds 7,000 minus pounds 1,000 interest) can therefore be reinvested.

Last tax year, I did 5,000 miles on business in my company car, mostly in the summer months. This tax year, my car is due to be changed in November. By then, I will have done 4,000 miles on business. I will struggle to do another 1,000 miles in my new car by 5 April. Will I still get the reduction on my tax for doing over 2,500 business miles in the tax year?

You get a one-third reduction in what you are taxed on for achieving 2,500 business miles of the tax year, but only if it is in the same car. If you change cars, the 2,500 is split on a time basis between the part of the year when you were driving the old car and the part of the year when you were driving the new car. Your old car will attract the one-third reduction, but not the new one.