Questions of Cash: What should I do with these Rolls-Royce shares?

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The Independent Online

Q. I have a personal equity plan containing Rolls-Royce ordinary shares.

Q. I have a personal equity plan containing Rolls-Royce ordinary shares. My PEP manager tells me that Rolls-Royce is undergoing a capitalisation issue of redeemable B shares in July, when 50 will be allocated for every one ordinary share held at March last year. I can redeem these redeemable B shares immediately at 0.1p per share, with the £80 proceeds credited to my PEP; convert them to ordinary shares "at a price based on the market value on a date determined by the directors of Rolls-Royce"; or do nothing until future redemption/conversion opportunities arise, which are expected in July and January each year. What should I do?
NP, Christchurch.

A. Make your judgement based on what you expect to happen to the company's share price because redemption at future times will be based on the prevailing market price of ordinary shares. Liam Hopkins of the independent financial adviser Hargreaves Lansdown says: "Rolls-Royce has issued B shares as a novel way of paying a dividend. It is more for the benefit of the company than the shareholder. It is more tax-efficient for RR to pay a capital distribution in shares than cash. The shareholder has similar options, just as if they had received a cash dividend: they can immediately redeem the shares for cash (which is liable for capital gains tax); they can convert the B shares into RR ordinary shares (as if it were a scrip dividend); or they can keep the shares and have similar opportunities when B shares are next issued.

"They will receive 50 B shares per share, valued at 0.1p, that is a 5p dividend. If they choose to convert them into ordinary shares, they can do so at whatever the price is on the conversion date, which has been set at 212p, so you will need 2,120 B shares for each new RR share." Ben Melling, a tax partner at the accountant Grant Thornton, adds that an increasing number of listed companies are issuing redeemable shares. In this instance there is no tax consequence: the PEP is CGT-free and even if you held them outside a tax-free structure the amount of gain would be below the CGT threshold of £8,200.

Q. My husband and I have had a joint account with Lloyds TSB for 16 years. I use my maiden name professionally and our joint account uses that name. Our Lloyds TSB mortgage uses my married name and recently the bank gave us a reference using my married name. But my local branch refused to credit our joint account with a cheque for £6,000 issued to us in our married names, returning the cheque by post.

Because of a bank holiday this lost us a week's interest, before the bank credited the account on the basis that my husband's name was on the cheque. In a letter, the Bromley branch said that the Banking Act requires people using both maiden and married names to operate two bank accounts. This seems bizarre, but I suppose it must be true. MF, Norfolk.

A. No it is not. First, banks' duties are now governed by the Financial Services and Markets Act, not the Banking Act. Second, banks are not prevented from allowing a married woman to use her married and maiden name through the same bank account providing there is proof, usually the marriage certificate, that the names relate to the same person and that other requirements of proof of identity and address are met. Many banks do this although some may choose for operational reasons not to allow customers to use two names. Lloyds TSB says its branches should accept cheques into a single account using a customer's married and maiden names, subject to the relevant checks. The bank said it will remind its staff of procedures. Lloyds TSB apologises for the error and is sending £25 in compensation for your loss of interest and inconvenience.

I had my will drawn up 18 months ago by a local firm of solicitors. I am a single woman and wanted to leave money in trust to my nieces. I was told that I couldn't because I am single. Is this true? AC, Lewes

Get yourself new solicitors. No, it is not true. The specialist trust lawyer Stephen Pallister, of Charles Russell solicitors, says: "We have freedom to dispose of our assets on death how we like in England." The exception is where existing dependents are not properly provided for, when they can bring claims for family provision.

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