Questions Of Cash: Help! I can't make sense of tax rules
Saturday 18 March 2006
Q. After a positive return from equities over the last year, I would like to be reminded of the basic rules for capital gains calculations. The current rules are far more complicated than before the present Chancellor took charge.
A. Glenn Martin, a senior tax manager at Moore Stephens LLP, says: "First, calculate the difference between the actual cost of the shares and the sale proceeds, including the costs of buying and selling, such as stamp duty or commission.
"If a gain arises, deduct an allowance for inflation called indexation relief. This is calculated from published figures and is based on the month of acquisition (31 March 1982 at the earliest) and the month of sale (April 1998 at the latest). For shares bought after 5 April 1998, no indexation relief is available. You may then be able to claim taper relief, which replaced indexation allowance in April 1998. This reduces a gain according to length of ownership.
"For non-business assets, like personal shares, relief is based on the number of whole years of ownership from 6 April 1998, or date of acquisition if later. For example, after three years of ownership a 5 per cent reduction in the gain is given. For shares held at 17 March 1998, a 'bonus' year is added to the actual period of ownership. Taper relief is increased by 5 per cent for each additional year of ownership, until a maximum 40 per cent is reached after 10 years.
"Any capital losses, and any losses brought forward from earlier years, are offset against your gains, before taper relief is calculated. The net gain after deducting indexation and taper relief is then reduced by the annual CGT [Capital Gains Tax] allowance of £8,500. The remaining gain is then taxed at your marginal rate of tax."
Q. Onetel persuaded me to move to its phone service, because its line rental is cheaper than BT's. After reading in The Independent how unsatisfactory its repair service is, I decided to switch back to BT. But Onetel cut off all my services and I have now received a bill from BT of nearly £300.
A. Onetel says that although you told it you wanted to switch back to BT for line rental, while keeping calls with Onetel, you forgot to notify BT. While you are not happy with this explanation, you have accepted it as you have no written proof of your recollection of events.
Q. I closed my Onetel account last April, received acknowledgement from Onetel of this at the time, cleared the £2.33 outstanding balance by credit card and have since been billed by the other phone company. In January, its debt collectors, Westcot, demanded £15.71 for an unpaid balance.
A. Onetel says the £15.71 represents charges levied after the account closure for calls made while it was still live. In view of the problems, the balance has been written off and the debt collectors called off.
We have had many complaints about Onetel, which was recently bought by The Carphone Warehouse. We asked Carphone Warehouse for a statement promising to improve customer service at Onetel.
Instead, a spokeswoman said: "Customer service has always been a top priority for both Onetel and The Carphone Warehouse, and it will continue to be so now that the two companies have become one group."
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