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Money snippets - 16/11/06
A miscellany of money news with your favourite financial expert, Paul Lewis
Student help This year’s new undergraduates face leaving university with a debt of up to £30,000 just to repay loans for their keep and fees. The annual student loan is now more than £4,000 (and over £6000 for students in London) and in most of the UK this year’s intake also faces paying tuition fees of £3000 a year.
Many parents and grandparents would like to help with these eye-watering costs. But the amounts are now so large that even if they can afford to they must consider how that might affect Inheritance Tax. The tax only comes into play if the donor dies ithin seven years of making the gift. But even if you do a little known concession allows parents (but not grandparents) to maintain their child while they are in full time education. You can make the gift up to April 5th after the education stops. So a parent with a heart as big as their bank balance
could pay off the whole loan at the end of the course without any concern about HT.
Grandparents can use other exemptions. For example, you can give away up to £3000 a year without it counting for Inheritance Tax at all. So that’s the tuition fees taken care of!
A new comprehensive guide to Inheritance Tax by Paul Lewis is available free through our new Saga website. It includes a full list of all the exemptions and details of how to split your house in half to minimise the bill your heirs will pay.
Protecting insurance payments
Two watchdogs showed their teeth this month. I reported in November on the attack by the Office of Fair Trading on penalty payments charged by banks and credit card providers. Now it has turned its attention to another rip-off – selling us expensive insurance whenever we buy a
loan. Payment protection insurance is supposed to keep up your repayments on a loan or credit card if you cannot work through illness, accident, or redundancy. But the OFT estimates we are wasting at least £1 billion a year because there is little competition and the banks and other lenders are overcharging us. At the same time the Financial Services Authority snapped at
the banks’ other ankles.
Posing as customers, 40 FSA researchers found widespread failures in the way payment protection insurance was sold. Information about the policy was not made clear, conditions which could prevent claim were not explained, and some customers were encouraged to pay for the policy up front and borrow the money to do so. Ten vendors out of 85 are being
taken through disciplinary procedures and many others have been warned.
If you take a loan you will save money by saying 'no’ to the PPI offered and looking for it instead on the internet or through a broker. Banks can charge six times as much as the cheapest deal around. Remember even if you claim on the policy it often will pay a limited amount or for a limited time. It will seldom clear debts completely and often excludes the over 65s. So it may be a waste of money at any price.
Fantastic plastic
There is still time to borrow the money to pay for Christmas without it costing a penny extra. How? Take out a credit card that charges you zero percent on purchases. Three offer that for twelve months – GE, Transformation, Marks & Spencer & More, and Halifax MS special. Many others offer periods from 10 months down to three. Apply now and when it arrives pile all your Xmas shopping on it.
On January 1, cut the card up and wait for your first statement. Divide the total by the number of months’ free credit (call the helpline to check exactly which statement will be the
last with 0% interest) and pay that amount back by direct debit each month. Most cards will let you pay a fixed amount. If yours won’t then pay the minimum by direct debit and the rest each month by cheque. Once it is paid off cancel your card and direct debit. That way you pay for Christmas over several months at no extra cost.
Little black dress
The world’s most famous little black number is expected to fetch a pretty large number when it is auctioned by Christie’s on December 5. The dress, made by Givenchy for Audrey Hepburn to wear in the 1961 film Breakfast at Tiffany’s, is being sold in aid of a charity which helps
relieve poverty in India. The auction house estimates it will fetch up to £70,000. Your wardrobe may be less exotic, but any good clothes and accessories from the 1960s can fetch
money.
Stardate October 7 2006
Star Trek enthusiasts boldly went where no fan has gone before at the sale of Star Trek memorabilia in New York. Trekkies in full costume battled it out with those on sub-space cellphones and viewscreens to push almost every lot above its estimate and set a world record of $576,000 (£320,000) for a 6ft 6in long model of the Starship Enterprise. Altogether they parted with $7.1 billion (£3.95 million) for what are, after all, film props.
This article was created: 10 November 2006.
This article was last edited: 28 November 2006.
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