Can I spend my pounds 10,000 mistake?
READERS' LIVES: Bank errors ... junk faxes ... PEP plans for windfalls. Your financial queries answered
Sunday 25 May 1997
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?
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?
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.
- 1 Is your name now 'banned' in Saudi Arabia?
- 4 Nasa-funded study warns of ‘collapse of civilisation’ in coming decades
Katie Hopkins continues campaign to become Britain's most hated talking head with poorly timed Bob Crow tweet
Ukip and Nigel Farage on course for remarkable victory in European elections
No EU referendum under Labour: Ed Miliband to reveal that vote on membership is ‘unlikely’ in next Parliament if party wins power
Tony Benn was entirely ineffectual - and usually wrong
The rise of Ukip: Study warns Labour that Eurosceptic party's electoral base now 'more working class than any of the main parties'
Europeans have ‘got whiter’ due to natural selection in past 5,000 years, scientists say
iJobs Money & Business
£35000 - £43000 per annum + Bonus and Benefits: Harrington Starr: A global lea...
£50000 - £60000 per annum: Harrington Starr: Linux Systems Administrator - UNI...
£32000 - £36000 per annum + generous benefits: Pro-Recruitment Group: * TAX * ...
£37000 - £40000 per annum + £20000 benefits package: Pro-Recruitment Group: **...
Day In a Page
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony
A charming four-bedroom Oxfordshire cottage with oak floors and chunky-beamed ceilings, £465,000
A beautiful one-bed flat in a sought-after portered block, with access to Norland Square communal gardens
A one-bedroom flat within a Sixties school conversion with high-spec design and open-plan kitchen, close to Lambeth North Tube, £435,000
A 17th century four-bedroom house, with open fireplaces, cellar and pool, £600,000
A three-bedroom, coach house with luxury open-plan living space and contemporary breakfast bar
A newly refurbished one-bedroom flat in the heart of Mayfair, close to Grosvenor Square
A charming four-bedroom house overlooking Burleigh Square Park, close to Thorpe Bay
A three-bedroom farmhouse with a large inglenook fireplace and exposed beams
A boutique mews house, set around a central courtyard, with three bedrooms and a private roof terrace
A four-bedroom farm-conversion with three bathrooms and two reception rooms
A two-bedroom detached house with ensuite bathrooms and a sun-drenched decked terrace, £750,000
A modern and spacious two-bedroom, penthouse flat with two bathrooms in a prestigious development
A beautifully renovated five-bedroom terrace with three reception rooms and a courtyard garden, £700,000
A four-bedroom period house which has been extended to provide almost 2,500sq ft of living space, £675,000
A pretty three-bedroom Georgian home with a 22ft drawing room and a master suite with a balcony, £525,000
A substanstial family home with five bedrooms and landscaped gardens in the much sought-after Branksome Park area
A well-presented three-bedroom house with front and rear gardens, close to White City station, £475,000
A handsome five-bedroom house in a sought-after location close to the city centre
A five-bedroom country home with valley views, equestrian stables and 27 acres of land, £725,000
A six-bedroom farm house with separate, detached cottages and 371 acres of land
A two-bedroom cottage with parquet floors, chunky beams and an open fireplace
A three-bedrrom flat with 2,733sq feet of living space, a beautiful private garden and 15 acres of communal grounds
A four-bedroom chalet bungalow with three bathrooms and a spacious garden, £525,000
A two-bedroom flat with an open plan kitchen and two balconies, close to Arsenal station
A Grade II-listed home with six bedrooms, secluded landscaped gardens and views across Hadley Green
A Grade II-listed mansion with two apartments and a cottage, near Gretna Green
A three-bedroom Grade II-listed mews house with vaulted ceilings and roof garden