Can I spend my pounds 10,000 mistake?

READERS' LIVES: Bank errors ... junk faxes ... PEP plans for windfalls. Your financial queries answered

I was informed by Lloyds Bank that some pounds 10,000 had been paid into my account from National Savings. I was expecting just pounds 50. I wrote immediately to the bank pointing out that the payment was probably an error. It took three months for the bank to recognise the error and debit my account. If I had spent the money, would I have been liable to repay it?

ET, Greece

As a general rule, you probably would have to pay back money wrongly credited in this way. But the ultimate test of your liability would be in the courts. A court would look at the particular facts of an individual case, the extent to which someone ought to have known money did not belong to them, the steps they took to correct the error and the way the bank responded. In your case, pounds 10,000 was a significant sum of money. Other, smaller errors, may go genuinely unnoticed by an account holder.

But even if you do have to pay back the money, it is the bank that made the error in the first place. It follows that you should negotiate the most advantageous payback terms. You should not be charged interest or bank charges if your account is overdrawn as the result of spending money which is not yours. And you should ask for the longest payback period if a shorter period would be a financial strain. If you cannot get your bank to agree terms, try the Banking Ombudsman or, failing that, you may have to let the matter go to the courts to decide.

Junk mail has long been an irritant for many people. But now there is another menace. It's the junk fax. I have even received a fax from the British Fax Directory, whose main function seems to be to sell my fax number to interested organisations. Can it be stopped?

ST, Norfolk

The British Fax Directory will put your fax number on its list only if you specifically give it permission to do so. The fax you received from the British Fax Directory was an invitation to go on its list. The list contains about 80,000 numbers. But around one million fax owners have been contacted, which suggests that some 92 per cent of people feel like you and don't want their number circulated to all and sundry.

You can register your fax number with the Fax Preference Service if you do not want unsolicited faxes. This should cut down the number of unwanted faxes, though won't eliminate faxes from organisations that don't subscribe to the service. Ring 0345 034599 or write to: Fax Preference Service, The Publicity Centre, Hendon Road, Sunderland SR9 9XS.

At the same time, consider the Telephone Preference Service if you do not want unsolicited phone calls from commercial organisations. Ring 0800 398893 or write to: Telephone Preference Service, 6 Reef House, Plantation Wharf, London SW1 3UF.

And if you want to cut down on junk mail you can sign up with the Mailing Preference Service. Ring 0345 034599 or write to: Mailing Preference Service, Freepost 22, London W1E 7EZ. If you do get junk mail, you can send it all back in the envelope provided. There is no need to use a stamp. Let the sender pay the postage, even if you do not receive a postage-paid envelope. At the same time ask for your name to be removed from the list of the organisation that sent out the mail.

For users of the Internet, a new e-mail Preference Service is being planned.

I cannot decide whether it is worth PEPping the various windfall shares I am due. I am a basic rate taxpayer and understand that even on lower- cost PEP plans, the charges could come to more than the income tax saved on dividends. But what about capital gains tax? The starting value of all my windfall shares is high, at about pounds 5,000. Should I be worrying about capital gains tax when I sell them in, say, 10 years?

DA, Birmingham

The Chancellor is promising to reform capital gains tax, but we don't yet know what he has in mind. For now, you could make some assumptions based on the current system.

Let's say you sell your shares in 10 years, by which time they might have trebled in value from pounds 5,000 to pounds 15,000. Since you paid nothing for the shares, the entire pounds 15,000 will count as a capital gain.

The first pounds 6,500 of gains you realise in the current tax year are exempt from capital gains tax anyway. Increase that by 25 per cent to pounds 8,125, assuming inflation totalling 25 per cent over 10 years and assuming that the pounds 6,500 allowance goes up in line with inflation. Deduct pounds 8,125 from your gain of pounds 15,000 and you are left with a gain of pounds 6,875.

But you can also claim an indexation allowance, which makes gains in line with inflation tax-free. Assuming inflation of 25 per cent, this additional allowance would be pounds 1,250, that is, 25 per cent of the original value of pounds 5,000. Deduct pounds 1,250 from pounds 6,875 and you get pounds 5,625, your taxable gain. Basic rate tax on pounds 5,625, at the current 23 per cent rate is pounds 1,293.75. So pounds 1,293.75 could be the capital gains tax you save by putting the shares in a PEP. Against that saving, you will have paid PEP charges for 10 years, but you could still make a decent net saving.

However, there is another way to save this tax. If you were to spread your share sales across two tax years, you would be able to use two years' worth of CGT allowance. Thus, you could avoid capital gains tax altogether even without a PEP, depending on what other investments you have.

The above figures inevitably make a lot of assumptions. Even so, the case for some of the available PEPs is weak (one worth considering is that of Fidelity - see Money Talk on page 15). Perhaps you should risk waiting to see what the new government will do about capital gains tax.

Bear in mind that you can PEP your shares at any time through the bed- and-breakfast route selling them one day and buying them back through the PEP. There will be a cost at the time, but you can decide then whether the cost is worth incurring, taking account of the gain on your shares and the likely tax you will save if they rise further in value.

q Write to Steve Lodge, Independent on Sunday, 1 Canada Square, Canary Wharf, London E14 5DL, and include a telephone number. Do not enclose SAEs or any documents that you wish to be returned. We cannot give personal replies or guarantee to answer every letter we receive. We accept no legal responsibility for any advice given.

Start your day with The Independent, sign up for daily news emails
Suggested Topics
Have you tried new the Independent Digital Edition apps?
Finacial products from our partners
Property search

MPs call for Equitable Life policyholders to be paid £2.8bn owed by government

Hundreds of thousands of people's policies were hit when the mutual insurer almost collapsed at the turn of the century

The elderly woman's family discovered the mistake

DWP criticised after it left a pensioner £26,000 worse off

The Department for Work and Pensions has been slammed after a series of cock-ups left an elderly pensioner £26,000 worse off.

The FCA has today issued a consultation paper on its plans to tighten up consumer credit rules to give consumers greater protection on guarantor loans and in other areas

Payday loan companies must publish their rates, says CMA

A 20-month investigation concluded that a lack of price competition between lenders has led to higher costs for borrowers

Vulnerable consumers are defined as those with poor literacy skills, those who have caring responsibilities, people with disabilities, dementia or the old

Financial companies are not meeting the needs of vulnerable consumers, says City Watchdog

The Financial Conduct Authority said the industry needs to start thinking about solutions to these challenges

The FTSE 100 is inching closer to its record high but can it maintain these levels?

In 1999 stock markets quickly tumbled, losing many a fortune in the process

Tax-free savings: Freedom dawns for the junior savers caught in low-income accounts

The parents of six million children stuck with low-interest saving accounts worth more than £5bn will be able to move the cash from this April. But what are their options? Samantha Downes reports

How much lower will mortgage rates go?

Another day, another cut. As lenders compete to offer the cheapest deals, Simon Read asks if borrowers should jump in now or wait for further falls

Are bills ruining your family life? Try the lover's guide to coping with debt...

If you're in the red and can't find a way out, it's time to get some help. Neasa MacErlean hears that relationships will suffer unless you are open with your partner, but there are organisations that will put you on the right track and get you talking

How to complain: From retailers to energy suppliers, it's easier than you think

When companies let us down, millions of us just take it on the chin. Simon Read shows how to make your voice heard

The dark side of debt: Descending into financial desperation is not due to self-indulgence

Three stories reveal financial desperation that was born of other, serious concerns, from being a victim of sexual assault, to losing a family member
The Financial Conduct Authority took the unprecedented step of making Wonga cancel the outstanding debt of 330,000 borrowers and scrap the fees and charges of 45,000 more

Wonga escapes prosecution after sending fake threatening letters to struggling borrowers

The City of London Police’s investigation into Wonga was scrapped because 'there is not sufficient evidence to progress a criminal investigation'

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SThree: HR Benefits Manager

    £40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

    Recruitment Genius: Office Manager / Financial Services

    £30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...

    Jemma Gent: Year End Accountant

    £250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...

    Jemma Gent: Management Accountant

    £230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...

    Day In a Page

    HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

    Scientists hail daily pill that protects against HIV infection

    Breakthrough in battle against global scourge – but will the NHS pay for it?
    How we must adjust our lifestyles to nature: Welcome to the 'Anthropocene', the human epoch

    Time to play God

    Welcome to the 'Anthropocene', the human epoch where we may need to redefine nature itself
    MacGyver returns, but with a difference: Handyman hero of classic 1980s TV series to be recast as a woman

    MacGyver returns, but with a difference

    Handyman hero of classic 1980s TV series to be recast as a woman
    Tunnel renaissance: Why cities are hiding roads down in the ground

    Tunnel renaissance

    Why cities are hiding roads underground
    'Backstreet Boys - Show 'Em What You're Made Of': An affectionate look at five middle-aged men

    Boys to men

    The Backstreet Boys might be middle-aged, married and have dodgy knees, but a heartfelt documentary reveals they’re not going gently into pop’s good night
    Crufts 2015: Should foreign dogs be allowed to compete?

    Crufts 2015

    Should foreign dogs be allowed to compete?
    10 best projectors

    How to make your home cinema more cinematic: 10 best projectors

    Want to recreate the big-screen experience in your sitting room? IndyBest sizes up gadgets to form your film-watching
    Manchester City 1 Barcelona 2 player ratings: Luis Suarez? Lionel Messi? Joe Hart? Who was the star man?

    Manchester City vs Barcelona player ratings

    Luis Suarez? Lionel Messi? Joe Hart? Who was the star man at the Etihad?
    Arsenal vs Monaco: Monaco - the making of Gunners' manager Arsene Wenger

    Monaco: the making of Wenger

    Jack Pitt-Brooke speaks to former players and learns the Frenchman’s man-management has always been one of his best skills
    Cricket World Cup 2015: Chris Gayle - the West Indies' enigma lives up to his reputation

    Chris Gayle: The West Indies' enigma

    Some said the game's eternal rebel was washed up. As ever, he proved he writes the scripts by producing a blistering World Cup innings
    In Ukraine a dark world of hybrid warfare and murky loyalties prevails

    In Ukraine a dark world of hybrid warfare

    This war in the shadows has been going on since the fall of Mr Yanukovych
    'Birdman' and 'Bullets Over Broadway': Homage or plagiarism?

    Homage or plagiarism?

    'Birdman' shares much DNA with Woody Allen's 'Bullets Over Broadway'
    Broadchurch ends as damp squib not even David Tennant can revive

    A damp squib not even David Tennant can revive

    Broadchurch, Series 2 finale, review
    A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower: inside the mansion of Germany's 'Bishop of Bling'

    Inside the mansion of Germany's 'Bishop of Bling'

    A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower