Money News

Scrap that car!
New car sales have been given a small boost by the Government scheme that makes cars more than ten years old worth at least £2000 if they are cashed in for a brand new model. Any T-reg vehicle or older (registered 31 August 1999 or earlier) can be used as part of the Government’s scrappage scheme as long as the person buying the new car has been the registered keeper of the old car for at least 12 months before they do the deal. The old vehicle has to be taxed and insured or registered under the off-the-road scheme.

And there is some evidence that older people – who account for just one in twelve of scrappage deals – are taking money from the value of their homes to buy a car under the scheme. One in ten of those releasing equity this year have used it for a new vehicle but that figure rose to 16% in May when the scheme began with the average amount released being £8710. Equity release specialist Key Retirement Solutions says up to £22 million could be taken out of the value of homes lived in by older people to buy a vehicle, in part because of the new scheme. If you are tempted remember that your insurer will charge a fee – typically around £20 – to transfer the insurance to a new vehicle and may charge a higher premium for a new vehicle. The scheme will end when 300,000 old vehicles have been scrapped.

Tax on phones
If you have a fixed line phone the Government wants to tax you £6 a year from 2010 so it can afford to extend the latest internet technology to every home in Britain. The new tax will raise up to £175 million which will subsidise the cost of laying fibre optic cable to the one in three homes that neither BT nor Virgin are willing to upgrade at their own expense.

The new technology is called ‘superfast broadband’ and it is only useful to people with the latest computer equipment who want to download films and music or play online computer games.

Almost one household in four has no computer at all. And four out of ten of those without do not want one. Many are older people who think the web is “just for the young”. They are also the most likely to use a fixed line phone rather than a mobile. So they will be paying a phone line tax to be connected to a service they do not want and will not use.

Only one concession has been made. Anyone who has a phone on BT’s Basic Tariff will be exempt from the new charge. BT says there are 400,000 of them but claims that number will grow to 700,000 by the end of the year.

The expense does not stop there. From the end of 2015 the Government wants to move radio broadcasts almost exclusively to digital DAB services. When that happens millions of old radios will become obsolete. The Government says by then new digital sets will be available for less than £20. But that is still £20 you would not otherwise have to spend. And it is not clear how radio broadcasts will be received in those areas of the UK that will always be beyond the reach of digital radio signals.

Buyers beware
The hunt is on for the buyers of 71 books worth a total of £230,000 who have no right to keep them even though they bought them in good faith from a reputable auctioneer. The books were stolen between 2001 and 2005 from the library of Sir Evelyn de Rothschild by the once respectable book dealer David Slade, a former President of the Antiquarian Booksellers Association. While cataloguing the Rothschild’s extensive and valuable library he helped himself to rare titles and sold them at book auctions, partly to pay credit card debts of more than £30,000.

One of the most valuable items was a signed first edition of Seven Pillars of Wisdom by T E Lawrence sold for £22,000 and an early edition of Chaucer’s Troylus and Cressida which fetched £15,000. At Slade’s trial in February Judge Christopher Tyrer sentenced him to 28 months in jail for his “significant plundering” of Sir Evelyn’s collection. Now the Antiquarian Booksellers Association is asking members who dealt in them to return the books. But less than half have been found.

Auction houses do not guarantee that sellers have title to the goods they put up. And it is the buyer – not the auctioneer – who is liable if they turn out to be stolen. The situation is very different at a shop. There the normal retail rules apply and the shop has to reimburse the buyer.

An old law in England and Wales which gave buyers legal ownership of items bought in daylight in good faith at some ‘markets overt’, including Bermondsey market in south London, was scrapped on 1 January 1995.

Redundancy and pensions
The number of people made redundant continues to grow – now at a record 23,200 every week. One problem with losing your job – among many others – is that the contributions to your pension scheme end. But the pension fund with your name on it remains. What can you do with it? And when you do get a new job should you transfer the fund over or not? Can you use your redundancy money to boost your pension? And what information can you expect from your old employer? The answer to these and many other questions can be found in a new leaflet from the Pensions Advisory Service called Pensions and Leaving Work. Call 0845 601 2923 for a free copy or download one from the publications section of the website www.pensionsadvisoryservice.org.uk

Capital babies
Cash or shares? Every new parent has to make that difficult decision when deciding what to do with the £250 Child Trust Fund voucher from the Government to greet their new baby. Cash is fairly dull but safe. The value of the money saved up can never go down though it is not likely to grow that substantially. Shares are supposed to grow more than cash over the long term, though that is always dragged back by the 1.5% annual charge made by the managers whether the fund grows or not.

Figures for the first four years of Child Trust Funds show a £250 voucher invested in an average stakeholder CTF has fallen in value by 7% and is now worth just £232. While the same amount put aside in a cash fund has grown 24% to £310. Shares are, of course, supposed to be for the long term. But even payments made at birth cannot be in the fund for more than 18 years and payments made later in the child’s life are invested for a much shorter period. Share prices of the biggest 100 companies are now roughly where they were 12 years ago in 1997.

Source: Lipper and MoneyFacts.

The best way to make sure a child has a decent amount when they become an adult is for parents, grandparents, relatives and friends to put extra money into the fund. Between them they can contribute up to £1200 a year – a total of £21,600 up to the age of 18. Getting that money in is much more important than how it is invested.