Are there any better alternatives to putting money on deposit?

QI’M a 50-year-old married man with two daughters, aged 10 and 8. My wife and I want to save €200 a month for their third-level education. We need the money to grow but we’re not sure what to invest it in. Deposit rates don’t look great, even if we locked into An Post’s best 10-year bond – it’s only paying 1.5pc a year. We have been told deposits are more tax-efficient than other types of monthly savings plans. Is that correct? Should we just go ahead with a deposit account?

AIF you need your money to grow, you need to be in a higher-returning asset than deposits. You have about 10 years before your daughters need the money for thirdlevel which means you are a long-term investor.

Seeking a higher return than deposits means you will need to take more risk with your capital. On the other hand, if you choose a good fund you could do very well. There is a great choice of funds available to small and medium-sized savers which cater for lower, medium and higher-risk investors. Remember that equities have outperformed all asset classes over the past 100 years. A good financial adviser will find an investment fund that suits your risk appetite and time horizon.

Dirt tax on deposits is currently 37pc and will decrease to 33pc by 2020. Exit tax on investment funds, whose overall long-term returns have been consistently higher than deposits, is charged at 41pc. You are right that deposit tax is lower. However, lower tax doesn’t mean a better total return on your money. The industry, led by the likes of Standard Life, is lobbying for exit tax to be equalised with Dirt as it doesn’t make any sense to punish people like you for trying to make a decent return. Apparently, it’s relatively cheap to lower this tax. Let’s hope Paschal Donohoe will make the right decision on Tuesday.

QI HAVE a so-called corporate plan for my private health insurance for the last 12 months. Can I claim refunds on outpatient expenses without having to exceed an excess? On my previous plan, my claim never exceeded the excess and therefore I just claimed tax relief each year.

AIF you are on a full corporate plan, then you should be able to claim guaranteed refunds on all your everyday out-patient expenses. There is an excess of €1 on every corporate plan which means there is effectively no excess, and most of these plans will give you a 50pc refund on expenses such as GP, physiotherapy, consultant fees and more, according to Dermot Goode of TotalHealthCover.ie.

Most insurers now offer a ‘scan and send’ facility which means you no longer have to wait until year-end for your refund. You either scan the receipt onto their website or download their claims app which means you can now claim your refunds throughout the year. And you can still claim tax relief on any portion of your outpatient claim not covered

by the health insurer.

QI HAVE been renting out a spare room in my house through Airbnb on and off over the last year. I have seen articles recently saying that people who rent out rooms are supposed to pay tax on the earnings, and that there are penalties from Revenue if you do not pay. I am now worried that I am going to face a big bill. I spent a fair bit of money doing up the room. I’m concerned that this is going to end up being loss-making for me now.

ACONTACT Revenue to explain the situation and get the ball rolling on your tax compliance. All income from Airbnb lettings is taxable and hosts are obliged to file a tax return, according to Taxback.com commercial director Eileen Devereux.

The deadline for filing is October 3. If you pay and file online, the deadline is November 14. There is no tax-free allowance available on Airbnb income. However, because it is the profit that is subject to tax, there are some deductions that may be allowed. These “allowable expenses” depend on whether this income is classified by Revenue as being a “trade” or not. Revenue will likely determine you a “trader” if:

■ You rent out the room/ property on six or more occasions annually, for any period of time.

■ If you ‘host’ for 30 or more nights per year.

■ If your Airbnb income exceeds €5,000 net per year. The cost of repainting a bedroom in advance of it first being made available for use, would be deductible for tax purposes only if Revenue considers you to be carrying out a trade. If your profits arise from the provision of accommodation on a once-off, casual or occasional basis, neither capital allowances, nor pre-trading expenses would be available, Ms Devereux said.