A. Your bills are paid by direct debit, and British Gas took too little from your account in the periods prior to the installation of your new boiler. Your £30 monthly payments were therefore increased to £44.
But British Gas failed to reduce your direct debit charge in line with the five-year free central-heating maintenance due because of your new boiler. British Gas has now reduced your direct debit deductions to £35 and is refunding you with £100 that you overpaid. British Gas points out that, as gas prices have risen by 40 per cent in the last three years, most customers now pay significantly more for their gas, but, by installing the more efficient boiler, you cancel out most of these additional costs. British Gas apologises for its previous failure to resolve the problem.
Q. In May, my mother died unexpectedly. She held joint building and contents insurance with More Than, which cost her about £30 a month. I informed More Than of her death, that the house would be put up for sale, and that, in the meantime, the house would be visited regularly, with members of my family staying overnight sometimes.
More Than asked for the remainder of my mother's insurance to be paid by cheque for £120 to cover the period from May to September, when the annual renewal was due. It then lost the cheque and then sent out a renewal notice that doubled the premiums, but without explanation. It now says that the premiums have doubled because the house is empty.
A. More Than, which is part of the Royal & SunAlliance group - confirms that the premium was increased because the property is unoccupied, leading to a full "unoccupancy loading" - normal industry practice. But the insurer has agreed to cut the premium by 26 per cent, a reduction of £150, as the house is to be sold, rather than left empty.
Q. I have received a redress payment from my insurer of £3,544 for the mis-selling of a mortgage endowment. Is it liable to income tax, and do I need to declare it to the Inland Revenue?
A. Whether a mis-selling compensation payment is liable for tax depends on how it is calculated. If your compensation solely relates to higher payments made by you, then the compensation is not liable to tax. But if the compensation contains an element to compensate you for the loss of access to your funds and, consequently, the loss of income that you would have gained, then this element of the payment is for lost interest and would be subject to tax. Guidance on this can be found on the website of HM Revenue & Customs, in the Inspector's Manual IM1500 to IM1507. Compensation for loss of interest should be included on your self-assessment return. If you do not receive a self-assessment return, you should inform your tax office.
Q. I have had an Egg credit card with cashback since its introduction. I spend £500 to £1,000 every month, and I always pay the full amount every month. As you highlighted in your report (Credit card lenders call time on borrowers' benefits, Save & Spend, 3 September), the amount of cashback has been cut. Where can I now get a better deal?
A. Although Egg has reduced its cashback allowance to 0.1 per cent, several competitors continue to offer better cashback deals. Morgan Stanley's Platinum card offers a standard 1 per cent cashback on the first £2,000 purchases each year (falling to 0.5 per cent thereafter), with a 2 per cent cashback on goods bought up to 1 February. Marbles offers 0.5 per cent cashback.
Q. My daughter was a student and non-taxpayer up to and including the tax year 2003/4, so she did not have to pay tax on interest received from her bank account. In 2004/5, she worked, paying standard rate income tax. Her bank paid the accrued annual interest on 6 April 2004, one day into the 2004-5 tax year, thus, apparently, pushing her into the tax net. Does she really have to pay tax on the full year's interest?
A. Interest is taxable in the tax year that it is paid, even if - as in your daughter's case - it relates to interest earned in the previous tax year.
Chas Roy-Chowdhury, head of tax for the Association of Chartered Certified Accountants, says that, while this seems harsh, "it cuts both ways", so a person who ceased working would not pay tax on interest paid after retirement or during an employment break, even if the interest was earned during a year in which they worked.
Roy-Chowdhury says that the situation could have been avoided if your daughter had elected to have her interest paid monthly instead of yearly. HM Revenue & Customs adds that she might also have avoided paying tax if, while a student, she had completed form R85 to have her interest paid gross, but suggests that, even though it appears that your daughter is not entitled to a refund, she could still complete form R40 to make a refund application.
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