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YOUR MONEY Tax breaks for adopting children ... AVC funds... savings plans. Your everyday financial queries answered
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I have applied to adopt a young girl. What tax breaks and benefits are available? I am single, in full-time employment and have no children. JJ, Edinburgh

The main tax allowance you'll be able to claim is the additional personal allowance. It is equivalent to the married couple's allowance and this year stands at pounds 1,790. To qualify you have to be single, separated, a widow or widower and have a dependent child living with you who is under 16 at the start of the tax year, or under 18 at the start of the tax year if in full-time education.

It's a flat-rate allowance worth the same to all taxpayers regardless of their top rate of tax. You make a tax saving of 15p for every pounds 1 of the allowance. So in the full tax year it is worth pounds 268.50. Put in a claim to your tax office.

When it comes to child-related social security benefits and how to claim them, contact your nearest Department of Social Security office for the relevant leaflet.

You'll be able to claim child benefit. This tax-free benefit is currently pounds l0.80 a week for the first child (pounds 8.80 for each other child). It is available to all parents regardless of income. Details are in leaflet FB8 Babies and benefit. In addition, single parents can get one-parent benefit for their first child, worth pounds 6.30 a week. Details in leaflet CH11.

If you have a low income, you may be eligible for means-tested family credit. Get leaflet N1 261.

I have just retired at 60 and have a small AVC fund with Standard Life of pounds 8,274. I have been offered a gross pension of pounds 662 a year rising by 3 per cent a year, or a flat-rate pension of pounds 839. How can I compare this offer with what I might get if I took the fund to a different provider? I have only two weeks to decide. DL, Norfolk

An AVC (additional voluntary contributions) fund is the extra money you have paid to boost your main employer-based pension. You say you have only two weeks to take a decision, but there may in practice be some leeway. If this reply comes too late, it should at least be a useful warning to other readers approaching retirement to plan well ahead and become familiar with the decisions that will need to be taken.

The simple answer to your question is that you should go to an independent annuity specialist who can discuss the options with you and make sure you secure the best income currently on the market.

Standard Life annuity rates usually compare well with others. But while they may tend to be in the top 10, why not go for the current best-paying company? Annuity rates can change almost daily; today's top payer for a male of your age may be replaced by another company tomorrow.

You are a 60-year-old male. Let's assume you want a flat-rate annuity with a guarantee that it would be paid for at least five years to a surviving spouse even if you died within that period. According to Annuity Direct, a specialist firm, last Tuesday your fund would have bought an annual income of pounds 820 from the best payer. That is less than the pounds 839 offered to you by Standard Life. But it simply demonstrates what a lottery getting a retirement income can be. Annuity rates generally have been falling over recent days since you got your quote from Standard Life.

In any case, there are various annuity options. For example, you already have a reasonable pension from your employer's main pension scheme, so you might want to take a risk with your relatively small AVC fund. You could opt for a with-profits or unit-linked annuity, which give the prospect of a higher income over the years provided the stock market performs well.

There are several annuity specialists, including Annuity Direct (0171 588 9393) and the Annuity Bureau (0171 620 4090).

Is my 10-year savings plan with an insurance company a safe, reliable plan? I have started to read the small print and am unsure whether to surrender the policy now after two years.

DD, Powys

If you surrender, you'll probably get little (if anything) back. On the other hand it would save you the next eight years' premiums, set to double in stages to pounds 40 a month in the last five years of the policy.

The final returns on many 10-year savings plans have been disappointing for investors. The 10-year with-profits policy you have bought is arguably of most benefit to the insurance company (and the salesman who sold it to you). And while you may pay no tax on the proceeds, the company will pay tax on the investment returns.

By comparison personal equity plans (PEPs) and tax-exempt special savings accounts (Tessas) are much more tax-efficient for most people, and they are more flexible in terms of being able to stop and restart savings, and cashing in.

Anyone tempted to buy a life insurance-linked savings plan should think once, twice and three times about it. Is it really a better option than other possible investments, such as a Tessa or a PEP?

Stopping payments early in the plan and redirecting the money elsewhere might still give you a bigger lump sum in 10 years than if you kept the plan going.

But who knows, your 10-year plan may turn out to be a winner. Only you can take the decision.

q Write to Steve Lodge, personal finance editor, Independent on Sunday, 1 Canada Square, Canary Wharf, London E14 5DL, and include a telephone number.

Do not enclose SAEs or documents that you wish to be returned. We cannot give personal replies and cannot guarantee to answer every letter. We accept no legal responsibility for advice.

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