Questions Of Cash: You’re a smarter investor if you can close Alliance & Leicester’s accounts
By Paul Gosling
Saturday, 16 August 2008
Q. I have written to Alliance & Leicester three times with no reply. My son had a “young worker” account that A&L changed to a premier current account, despite his already having one. My son requested that one of these accounts be closed and cut up his card. In January, A&L told him his balance was down to 1p on the account he had closed and that he needed to pay in money. But he was in hospital, after a nervous breakdown. I took him to the bank at the first opportunity. The cashier said that she could not close the account without the card, but if he transferred £5 into the account, there would be no more bank charges. Yet, though he paid in £5, he has been charged another £25. These charges are very unfair on someone who is ill and has been an A&L customer for many years. CL, Nottingham.
A. Alliance & Leicester says it has no record of your son trying to close one of his premier current accounts. A bank spokeswoman says: “Account closures can only be carried out at head office, so if a request was made at a branch, the request would have been forwarded to the relevant area in head office. If this was the case, as we have no record of the request we can only assume that it was lost somewhere between the branch and head office, for which we apologise.” The failure to close the account led to underfunding fees, putting the account into an unauthorised overdraft, triggering the £25 charge. A&L says it did close your son’s duplicate account when you wrote to the bank. It has credited him with £30 as a gesture of goodwill.
Q. I have a holiday home in Italy, which I rent out. I’ve been told that I won’t have to pay tax in Italy as long as the income is less than €7,500 a year. In the last tax year, it was very close to this threshold. I receive the rent in sterling, so the amount of income in euros depends on the exchange rate, which has been constantly changing. What exchange rate should I use? Do I have to pay tax in the UK as well? Can I choose where to pay tax? CP, London.
A. Antonio Risorto, senior tax manager at accountants Grant Thornton, says: “Assuming the owner of the property is UK resident and domiciled, the owner would be liable to UK income tax on their worldwide income. For the purposes of Italian tax, non-resident taxpayers are liable to IRPEF – personal income tax – and must file a tax return for Italian-source income exceeding €185.92. The €7,500 relates to a tax credit that is not available for offset against rental income. Double tax relief is available to prevent individuals being taxed twice on the same income. An individual cannot choose where to pay their tax, other than by moving to another country. Taxing rights are determined by the type of income and the “situs” (location) of the asset. Buy-to-let income is liable to Italian income tax first. HM Revenue and Customs’ strict position is that they require exchange rates to be taken for the date the income arises; in practice, they accept a reasonable approach (if it is consistent). For rental income received over the course of a year, the average exchange rate at www.hmrc.gov.uk appears to be reasonable. Local tax advice should be sought.”
Q. I recently took power of attorney over my mother’s financial affairs. She is entitled to a payment for some shares she holds. How do I obtain this on her behalf? SH, Warwickshire.
A. Stephen Pallister, tax and trust partner at the solicitors Charles Russell, says: “If you have an enduring power of attorney (EPA) and she has lost mental capacity, you must register it with the Office of the Public Guardian (www.publicguardian.gov.uk) before you can use it. If your mother has not lost capacity, the EPA may be worded so that you can use it as an ordinary power of attorney – you can use that straight away, if your mother has not lost capacity. Alternatively, since 1 October 2007 she may have made a lasting power of attorney (relating to “property and affairs”), the EPA replacement. This would have to be registered with the OPG before you could use it.”
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; cash@independent.co.uk.