A: In January, Mervyn King warned that 2008 could be a tough year for the UK economy. He forecast a slowdown as consumers tighten their belts and reduce their spending. This fuelled expectations of an interest rate cut. However, fuel prices and energy bills are high and King predicted “a period of above-target inflation”. This leaves the Bank of England caught between a rock and hard place. If rates are eased further, it could fuel inflation – but if rates stay on hold, this risks suppressing the prospects for economic growth.

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Gifting your houseIf your estate is above the inheritance tax threshold, it can seem a good idea to gift away your house to your children now. As long as you survive 7 years from the date you give it, it’s theirs, right? Not exactly. There are a few things you need to bear in mind. First, you will have to pay them a full market rent to live there or it stays inyour estate as a ‘gift with reservation’ – and your children will pay tax on that rent. As it becomes their property, if they become bankrupt, or divorce, it may be sold from under you. And, as a second home, they will be subject to capital gains tax on the price rise when they do sell anyway. Take advice to find a better way.

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