Questions Of Cash: With vouchers, it pays to read the small print
Saturday, 24 May 2008
Q: As a result of a safety recall, I had to return my Flymo mower to the retailer, Homebase, in exchange for a new machine. But instead of this, Homebase gave me a cash refund of £80. I bought a similar machine for £100. I later returned to the shop with a Homebase voucher, which was worth £5 when more than £50 was spent. But I was told this was not accepted after the original sale – unlike my experience with the Nectar loyalty scheme. DR, St Albans.
A: Homebase points out that the terms and conditions attached to the issue of the voucher make it clear that the voucher must be presented at the time of the sale. It is not willing to make the refund. Other retailers and loyalty schemes have different terms and conditions and may be more flexible in their implementation of them.
Q: I have a dispute similar to that of PG of Hungerford (Questions of Cash, 19 April). I closed a long dormant Goldfish credit card in December. Despite this, Goldfish keeps sending premium demands for the Card Protection Plan. It has now started adding non-payment fees on to the monthly bill, plus interest. My repeated letters and phone calls to Goldfish have got nowhere. We only took out the policy because my wife – who speaks English as a second language – felt obliged to take out the cover from a high pressure sales call while I was working overseas. When she tried to cancel the policy, she was not allowed to do so as she was not the principal cardholder. ML, Northampton.
A: Goldfish says that according to its records, you, not your wife, took out the policy in 2003. It confirms that it refused to cancel the policy at your wife’s requests because she was not the principal cardholder. It accepts that it failed to act on your repeated requests to close the account and cancel the policy: it apologises and has cleared the balance of £54.21.
Q: My daughter bought a house with her boyfriend and some months later they split up. Her boyfriend is not interested in the house. Our daughter went to the mortgage lender, Nationwide, which advised that her income was not sufficient to take over the mortgage. It refused to allow me to act as a guarantor, so I agreed to take on a joint mortgage with my daughter. My house is paid for and I have been advised that as I now am on two deeds as a home owner I will be liable for Capital Gains Tax (CGT). Is this correct? JM, Lincoln.
A: Nationwide says that it is willing to allow close family members to act as mortgage guarantors, providing they are regarded as having sufficient income to meet the costs of servicing the debt on their own and that they pass a credit scoring test. We will ask Nationwide to reconsider its rejection of your application if you wish us to do so.
Patricia Mock, private client services director at accountants Deloitte, says that Nationwide will probably treat your daughter’s home as the security for the loan, meaning that you acquire an interest in the house. You would then be subject to CGT on the sale of the property. “The gain on sale would be based on the value of your share when you acquired it, compared to the eventual sale proceeds of your share,” he says. “Subject to your annual capital gains tax exemption (£9,600 for 2008/09), the gain will be taxed at 18 per cent (at the current rate). If your daughter pays you rent for the occupation of your part of the house, this will be taxable income for you, with the mortgage interest a deductible expense. If you were a guarantor, your daughter would have owned the property 100 per cent and all the gain would be exempt.”
An alternative way to reduce CGT liability would be to split ownership of the house so that your daughter has most of the interest in it – perhaps 99 per cent. You would need to take legal advice and find out whether the arrangement was acceptable to the mortgage lender. “Another option might be to have two separate mortgages – your daughter’s secured on her house and yours secured on your own house.”
Again, the mortgage lender’s approval would be required. He adds: “The solutions all focus on gifting your half to your daughter, and you need to consider very carefully whether you want this to happen if you are still liable for the mortgage. You might want to consider general estate planning as part of this exercise, including thinking about your will.”
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.