Your Money: Savers must be quick to cash in

Steve Lodge on the problems facing National & Provincial customers if they are late in claiming windfalls
Some National & Provincial savers who do not act quickly to meet a deadline for registering for their windfalls from the society's takeover by Abbey National could face an unforeseen tax bill. Other savers who are late may face delays in getting their pounds 500 handout. The windfalls, ranging from pounds 500 to pounds 4,250, are due to be handed out between 27 August and 2 September.

The society has posted registration forms to 1.4 million of its savers and borrowers. These should be returned, using the enclosed reply-paid envelope, by Friday.

If you miss the deadline you are not disqualified but there may be complications. What are termed two-year qualifying savers (those with accounts open on 31 December 1993) are being offered the choice of shares in Abbey National or cash. If they miss the deadline they will get cash.

This could land some with a capital gains tax (CGT) bill. Cash windfalls are treated as capital gains in the tax year in which they are received, which means some people with other gains could end up paying CGT. Share handouts are also treated as capital gains but the gain is only counted for tax purposes when you sell them. Until then it remains a paper gain.

One way of avoiding even the possibility of tax on share windfalls is to transfer them into a personal equity plan within 42 days of the handout date. Once in the PEP, all profits and dividends are free of income and capital gains taxes.

If you are not a two-year saver the windfall is pounds 500 of Abbey National shares. There is no cash option. But if you miss the deadline you may have to make a special claim for your shares, which could create delays.

The payout for the society's 800,000 two-year savers is shares or cash worth pounds 750 plus 7 per cent of their balances, up to pounds 4,250 in total. If you have not received a registration form from the society and think you should have, or think you have been wrongly identified as qualifying for the basic windfall rather than the pounds 750 plus 7 per cent, then call the society's information line on 0800 44 66 00. The society cannot advise on whether shares or cash is better.

Tax is one point to consider. Savers should also remember that shares are riskier because they could fall in value. Equally though, they could rise. If you decide to sell, then, as with all shares, there will be a dealing cost of pounds 10 upwards.

To qualify for the flat-rate pounds 500 or pounds 750 windfalls, savers should stay in credit until 5 August. After that they are free to close their accounts and still get the shares or cash at the end of August. Two-year savers who want to maximise their payout should ensure their balance on 4 August is as high as that on 28 April 1995. The lower of the balances will be used for calculating the variable 7 per cent bonus. Again, from 5 August, these savers will be free to close their account without affecting their windfall.

Indeed, with N&P's rates looking fairly uninspiring, savers may be tempted to move their money elsewhere in August, possibly even to another society that has yet to announce a windfall. Birmingham Midshires is the hottest tip, but requires a minimum opening balance of pounds 1,000.

After N&P, the Halifax and Alliance & Leicester are probably the next on the windfall conveyor belt in terms of putting out documentation about already-announced handouts.

Halifax will write to its savers later this year with a reminder. Savers with balances of pounds 1,000-plus at 25 November 1994, when the windfall was announced, stand to benefit from extra shares related to the size of their balance. Halifax intends to give these savers notice to top up their accounts to this November 1994 level to ensure they maximise their potential windfalls.

In the meantime, therefore, savers should be able to withdraw savings without missing out, so long as they maintain a basic qualifying balance of pounds 100. If all goes to plan, qualifying Halifax savers and borrowers will get their free shares, worth up to pounds 1,000 on average, in the summer of 1997.

Alliance & Leicester, which plans its free share handout in early 1997, also intends to disclose details later this year. At the moment, savers are in the less-than-satisfactory position of not knowing whether they will reduce the size of their windfall if they withdraw some savings. Until then, they may be tempted to leave their money untouched, and certainly to keep at least pounds 100 with the society.