Raking in the windfall

The tax on buying a home could cost us £5 billion this year if current trends continue. It is called Stamp Duty Land Tax and is charged whenever a home is bought for more than £60,000 – though in some parts of the country which are called ‘disadvantaged areas’ that limit is raised to £150,000. The lowest rate is 1 per cent so someone buying a home for the average price of around £160,000 will pay £1600 in tax. Since 1997 higher rates have been charged on more expensive homes and are now 3 per cent on homes bought for more than £250,000 and 4 per cent on those costing more than half a million pounds. That means someone buying a home for £300,000 faces a tax bill of £9000. And someone paying £600,000 for their new house will have to pay £24,000 in tax.

As house prices have risen so have the number of people paying it. Back in 1996/97 when the average home cost around £65,600, stamp duty was paid on fewer than one in two home purchases. But now the average is more than £160,000 it is charged on more than three out of every four purchases. In some parts of the country it is paid almost every time a house is bought.

Since Labour came to power, Stamp Duty Land Tax has become a major source of income for the Government. In 1996/97 it brought in just £675mn. But that rose to £3.6 billion in 2002/03, the latest year for which figures are published. With house prices still rising strongly, the take could reach nearly £5 billion this year.

More information: Inland revenue  and Saga Magazine December 2003 p148-149.

Small fortunes gathering dust
Every home has a coronation mug in a loft or at the back of a cupboard. But most of them are relatively worthless. You can pick them up for £5 or less and even most Victorian examples barely scrape into double figures. But fine quality commemoratives are a different matter. Decorative and full of historical interest, they are the passion of dealer Susan Rees. "You can pay up to £100,000 for a tin glazed Charles II coronation platter or mug." The starting point for most collectors is around the start of the 19^th century. "One of the rarest is the George IV Coronation. Few were made because he was so unpopular. But for the same reason they made many commemorating his death in 1830 and they can be picked up for around £420."

And she says it can be more than just collecting "They are a good investment. In good quality and good condition then prices have held their own and are increasing. They key thing is condition – that is crucial. And concentrate on china not on the pottery mugs that are so common. Some people collect the makers – Wedgwood, Coalport, Doulton, Aynsley, Worcester and of course Crown Derby."

Many of the more interesting pieces are not related to a coronation or royalty "A true commemorative has a name or a date or relates to an event that can be pinpointed. In 1855 a potter called Samuel Alcock made jugs to help the widows and orphans of soldiers lost in the Crimean War. You can find one now for £250 to £400 and they are tremendous examples of workmanship, we just can’t do it today". There are also political commemoratives. Susan’s favourites are caricatures of Disraeli and Gladstone done in the 1870s.

But she warns that anything after 1900 is very common and not likely to be worth much "though every collector has to start somewhere. And whatever you get, make sure it’s perfect."

You can contact Susan Rees at commemoratives@susan-rees.fsbusiness.co.uk

Play your cards right
More than eighty credit cards reward you for spending money on them. So they are a useful way to get a discount on everything you spend – particularly helpful with Christmas approaching. The deals you are offered are complex and it is hard to work out the value of Airmiles, Clubcard points, Celtic rewards or Pulsebeats. So the best deals to go for are the ones that simply offer you cash. In other words for every £100 you spend on the card you get a small amount of cash credited back to your account. Fifty pence is fairly typical and that is offered by more than a dozen cards. But you can get more than that. Leeds & Holbeck Mastercard pays you £1 per hundred pounds on the first £2000 spent in the year and then 50p per hundred after that. Slightly simpler, but not as good, is the More Th>n cashback rewards card which pays a straightforward 80p for each £100 spent. If you spend up to £3333 in a year the Leeds & Holbeck card pays the most. If you spend more than that then More Th>n will give you the top deal. These schemes are only useful for people who pay their card off in full every month. More information www.moneyfacts.co.uk

Heat is on for energy company
One of Britain’s biggest energy companies has been accused of treating tens of thousands of its older customers unfairly. They had joined Powergen’s Staywarm tariff which, as we reported in Saga Magazine in October, offers people aged 60 or more a fixed cost for all their electricity and gas however much they use. Its website promises "Powergen Staywarm offers you complete peace of mind. Once you’ve joined, however much gas and electricity you need, you pay a fixed price."

But that peace of mind was shattered for 35,000 Staywarm customers when Powergen said they were using too much fuel and would be removed from the flat rate tariff. The only exceptions were people on certain state benefits. After much criticism in the press, Powergen announced that it was withdrawing this threat and 5000 people who had already been taken off the Staywarm tariff would be invited to return to it. But from January a new high user tariff will be introduced for the ten per cent of Staywarm customers who use too much fuel.

Powergen will not say how it will define ‘high user’ or what they will pay. But it did confirm that high users who get pension credit, council tax benefit, attendance allowance and similar benefits will be offered a ‘discounted high user tariff’. Details will be announced in the New Year.

Passport applicants get free ride
If you were aged at least ten when World War II broke out you will no longer have to pay for a passport. From October 18 anyone born on 2 September 1929 or earlier is exempt from the £42 standard fee when they take out a new passport or renew an old one. The idea developed out of a scheme to allow veterans of the war to return to old battlefields or revisit places or people they last saw in the war. But it has now been extended so that anyone who was at least ten years old when the second world war began is eligible for a free full passport which they can then use to travel anywhere in the world. The Home Office says the scheme will apply to around 4.5 million people. They use the normal application form and should contact the Passport Adviceline on 0870 521 0410 for information about their nearest regional passport office. Forms are also available from Post Offices, but it will still charge £6 for the check and send service which helps people make sure the form is filled in correctly. Anyone eligible for the scheme who paid for a passport between 19 May 2004 and 18 October 2004 can apply for a full refund on the same number. More at www.passport.gov.uk.

The state pension will go up in April in line with the rate of inflation last September. That was 3.1% so I calculate that the £79.60 pension should rise by £2.45 a week to £82.05. The pension paid to a married woman on her husband’s contributions should rise by £1.50 to £49.15 a week. Pension credit, the means-tested top up, rises in line with the average earnings index from May to July which was 3.9%. That should put the guarantee credit up by £6.30 to £109.55 a week and to £167.25 a week for a couple. Anyone over 65 should be able to get some pension credit if their income is less than £150 a week (single) or £221 a week (couple). But savings over £6000 can affect pension credit claims. All these amounts are subject to confirmation.

My Money
We are planning a new feature on the Money News pages from the New Year. But we need your help. Each month we will feature a reader’s experience – good or bad – of how they have handled their money. We want your best deals as well as your worst mistakes. So if you want to appear in print, and help other Saga readers avoid your mistakes or follow your ideas, email or write to etc etc. Please make sure you include a phone number.

December 2004

e-mail Paul Lewis on paul@paullewis.co.uk