Questions Of Cash: Buy online air tickets with care

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Q. In June I bought a flight from Heathrow to Perth, for December, through and mistakenly chose Gatwick as my return airport. I realised my error within 12 hours and requested a change of return airport. I have a sore knee which would make a longer journey home from Gatwick impossible after a long flight. But was unwilling to help. The airline, Emirates, said I could have made the change if I had booked through them, but as I hadn't, there was nothing they could do. I used an HSBC credit card to pay for the tickets, but HSBC refused to credit the payment as the transaction had been legitimate. I have now bought a return flight to Heathrow through at the same cost, £250. Can you help me? ND, by email

A. has now reimbursed you with £250 for the cost of the cancelled flight.

Q. My contract with Virgin Media is for a combined TV, phone and broadband package for a total of £30 a month. Each invoice since March has been much more than £30 – sometimes charging for two TV packages. I was given a one-off £20 credit, but the overcharges continued. Virgin Media has yet to honour the promise of the direct debit guarantee, which promises a full refund if an error has been made. MP, by email

A. Virgin Media has corrected your bill, credited your account and is providing you with a free digital TV upgrade for 12 months. The company admits an error was made on your account and apologises.

Q. TalkTalk keeps telling me that my phone account has been cancelled, but it hasn't been and I continue to receive bills. TalkTalk says that my phone number has been issued twice and needs to be changed. I don't want to do this. ER, Great Torrington

A. Carphone Warehouse, which owns TalkTalk, has now resolved the problem and has credited your account with £50 as a goodwill gesture.

Q. My wife and I bought a run-down property in 1969. We spent three years and £1,000 improving it for use for family holidays. We retired in 1998, sold our principal private residence and moved into our second home. We had much of the house gutted in 1995 and began a substantial extension. This was completed a year after we moved in. As the increase in value of the second home between 1982 and 1998 was due to inflation, will this be covered by the indexation allowance, eliminating potential capital gains tax liability to that date? Since this property became my principal private residence in April 1998, will there be no capital gains tax liability if I sell it in the future? KR, by email

A. Richard Proctor, a tax partner at accountants Grant Thornton says: " When you dispose of a property that has been your principal private residence (PPR) throughout the period of your ownership, there is no taxable gain, as the full amount is covered by PPR relief. As your property has not been your PPR throughout the period of ownership, not all the gain is covered by PPR relief. In your case, the gain is time-apportioned between the periods when the property was and was not your PPR – only the proportion from 1998 is exempt. As the property became your PPR in April 1998, if you sold the property in April 2008, only 10/26 of the gain would be exempt. The exemption for the period when the property was your PPR is calculated by reference to the capital gain after deducting all allowable costs and reliefs. As your property was bought before 31 March 1982 two gain calculations must be performed: one using the actual cost of acquisition in 1969 and any subsequent capital costs to 31 March 1982, the other using the market value at 31 March 1982 as the "cost" in the gain calculation. This is known as "rebasing". These calculations are then compared and your gain will be the lower of the two. You can deduct capital costs incurred on improving the property from March 1982 to the date of sale. There is an !"indexation allowance" available to reduce your capital gain, calculated from March 1982 and April 1998, based on the retail price index (RPI). This is unlikely to wipe-out your capital gain as the rise in house prices exceeded RPI. It should be assumed you will have a capital gain, but you can further reduce your gain by "taper relief". This reduces the chargeable gain based on the type of asset disposed of and the number of years it has been held since April 1998. In your case, if you were to sell now any gain would be reduced by 35 percent as a result of taper relief. Any remaining gain would be split between you and your wife according to your individual share in the property and you would each then have the annual exempt amount to set against the gain (£9,200 for 2007/08), assuming you have not made any other capital disposals in the year. If the disposal proceeds or gains are above certain limits, the disposal will need to be reported to HM Revenue & Customs (HMRC)."

Questions of Cash cannot give individual advice. Please do not send original documents. Write to: Questions of Cash, The Independent, 191 Marsh Wall, London E14 9RS;

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