Brickbats over C&G widows

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IT HAS taken them nine long months of campaigning but C&G widows - and widowers - have finally won the right to benefit from the society's takeover by Lloyds Bank.

On Friday, a Private Members' Bill was rushed through the Commons and the Lords.

Henceforth, widows of qualifying members will get the same cash payments as their husbands would have received had they survived until the takeover. As a result, some 5,000 widows will receive £25m between them.

Among all the backslapping taking place this weekend, it is tempting to forget the lessons of this affair. Let us first hand out the brickbats.

Brickbat number one to C&G and Lloyds, who waited until virtually the last moment before they finally stumped up the extra money and used their lawyers in drafting the legal changes to help the widows.

Brickbat number two for the Treasury, which refused to contemplate changes in the law for years, despite knowing of the problem since the days of the Abbey National flotation.

To argue for years that piecemeal legislation is not on and that a complete overhaul of the Building Societies Act is needed . . . before caving in under the weight of MPs' postbags is a sign of weakness reminiscent of the dangerous dogs fiasco.

Brickbat number three goes to those Labour MPs who almost scuppered the deal between Labour and the Conservatives to let the Private Members' Bill go through speedily. Those who objected to the Bill may have had the best motives - they wanted more discussion on a disability Bill - but you do not play politics with people's entitlements.

After the brickbats, the praise. The many women who lobbied MPs, wrote letters, spoke to the media and argued their case the length and breadth of the country are the real heroines. They deserve our respect - not least for showing us what can be achieved if you are strong and determined enough.

FOR A severe headache, try studying the small print of the capital gains tax rules. Years of tinkering by successive Chancellors has turned a once relatively simple law into a maze for obsessive accountants.

I am therefore indebted to my colleague Anthony Bailey for a lucid explanation of how some investors can avoid paying up to £4,000 capital gains tax. Try this for size.

CGT is a tax on the rise in the value of certain things, including investments. But you are not taxed on any rise that simply mirrors inflation. If you buy £1,000 worth of shares and sell them for £1,300 you have made £300, a 30 per cent gain. Now, assume that inflation was 30 per cent during your period of investment. In that case, the entire £300 would be tax free.

But what if inflation had been 50 per cent? If the investment had mirrored inflation, it would have been worth £1,500 when you sold out. But you only got £1,300. After inflation, you have "lost" £200.

Until November 1993, it was possible to take account of that £200 loss - in taxspeak, an "indexation loss" - and set it against gains elsewhere to cut your tax bill. But that year's Budget plugged the loophole.

In future, gains could only be reduced to zero and inflation could not be used to create or increase a loss. The Chancellor then retreated, but only so far.

People can now use indexation losses of up to £10,000 for sales between 30 November 1993 and 5 April 1995.

If you are facing a capital gains tax bill, now is the time to see whether you have made any indexation losses.

You may also want to sell some shares or unit trusts at an indexation loss before 5 April. An indexed loss of £10,000 could save a 40 per cent taxpayer £4,000. Now pass the paracetamol.