e-mail Paul Lewis on paul@paullewis.co.uk
Don’t be scammed
One in twenty of us was the victim of a scam in 2010. That remarkable figure
from the Office of Fair Trading implies that well over two million people were
tricked out of money by crooks. And the research also found that 7% (one in 14)
of those duped lost more than £4000. The most common scam is called the ‘advance
fee’ trick. It offers to unlock an inheritance, a tax refund, a lottery win or
to help someone release money from a corrupt foreign government or bank. To do
that magic it dupes the victim into handing over bank details and then paying an
upfront fee. Further demands always follow.
In the cold light of day these schemes seem like obvious scams. But at the time
they can seem very reasonable. More than six out of ten people who had fallen
for them said that they looked real and that was why they got involved.
There is no doubt that scams are getting cleverer. They use email and cold phone
calls to try to persuade you that some special deal is only available for a
short time and if you pay them or give them your personal details then you will
get a big reward. Any such email or call is always a lie. Don’t be embarrassed
or afraid to delete it, destroy it, or hang up.
Protect yourself by keeping these rules in mind:-- If you have not entered a
lottery you cannot win it. If someone says they want to transfer money from a
foreign country using your account it is never true. If an email says you are
due a tax refund it is not from HMRC. If anyone offers you anything that seems
too good to be true it always is. Never be tempted to join the millions of
people who lose billions of pounds to crooks and con artists every year.
Pension rise error
State Pensions have been too low for up to 12 years. An error by the Office for
National Statistics in measuring the cost of clothing and footwear meant the
official rate of inflation was too low from 1997 to 2009. The discrepancy in the
overall index was at least 0.3% a year. That does not sound a lot but if the
statisticians had got their methods right the state pension would probably be
about £3.70 a week higher than it is. In other words from April 11 the basic
state pension would be almost £106 a week instead of £102.15.
The error was revealed by the Bank of England in a report on inflation published
in February. In its rather formal language it said that over the years 1997 to
2009 “clothing prices were around 5.5% a year higher than measured in the CPI,
equivalent to adding 0.3 percentage points to aggregate annual CPI inflation.”
No estimate is given for the effect of the mistake on the RPI which is used to
raise the state pension. But the Bank of England says the problem is likely “to
have a larger impact on RPI inflation than on CPI inflation” and suggests that
it could have added almost another 0.3% to RPI in 2010. The effect over the
twelve years is not known.
The ONS says the problem was corrected in 2010 and it does not admit it was an
‘error’. It will not be
recalculating price indexes going back to 1997. The Department for Work and
Pensions says that it would not change pension rates because the index was not
being revised.
Check your tax code
If you pay tax you will have been given a new tax code from HMRC earlier this
year. The tax code is used by your employer or pension payer to tax your income.
In the last couple of years the Revenue has got many tax codes wrong so it is
worth checking your carefully. CORRECTED If you get a state pension your
tax code will be worked out starting with your tax free personal allowance. That
is £7,475 if you are under 65 this tax year, £9,940 if you are aged 65-74 and
£10,090 if you are 75 or more. The Revenue then deducts your state pension. So
if you are aged 66 and get a state pension of £100 a week your tax code will be
worked out by deducting £5,200 from £9,940 which gives £4,740. Your tax code is
then 474P. If you have other untaxed income from self-employment or other
sources that can also be deducted from your allowance. If you do not understand
how your tax code is worked out call HMRC and keep them on the line until you
do.
If you reach 65 by 5 April 2012 you are entitled to the higher personal allowance against your income in the whole tax year. However, new practice by HMRC means that your tax code will not normally be changed until your 65th birthday. When it is changed that should mean you pay the right amount of tax and you may be due a refund. Because of this change it is very important to check the tax deducted from your pay or private pension in the year you reach 65 and the next tax year.
Remember that if your income exceeds £24,000 in the year then your personal allowance will be less than £9,940 and if your income is more than £28,930 it will be reduced to the standard personal allowance of £7,475.
One group should take special care. If you are married (or in a civil
partnership) and one of you was born on 5 April 1935 or earlier then you should
get an extra married couple’s tax allowance. It means your tax should be reduced
by about £720 over the year. But the way it is worked out through your tax code
is complex and last year the Revenue made mistakes in many cases. So if you get
any married couple’s allowance and you do not understand how it is worked out
then it is always worth calling the Revenue to check.
DLA
for severely visually impaired
People with very
poor vision who are already over the age of 65 are being excluded from a benefit
worth £51.40 a week.
Blind people under 65 can get a benefit called the mobility component of
Disability Living Allowance. As long as they claim it before the age of 65, they
can continue to receive it to any age. From April this benefit is being extended
to those with what is called severe visual impairment. But anyone who is 65 or
more on 11 April 2011 – born before 11 April 1946 – is excluded from the
extension. The exclusion includes people over 65 who already get the lower rate
of mobility component – which is £19.55 from this month. They can keep that for
life but cannot get it upgraded to the full rate of £51.40. Younger people who
claim mobility component for severe visual impairment under the age of 65 will
be able to keep it for the rest of their lives as long as their condition does
not improve significantly.
e-mail Paul Lewis on paul@paullewis.co.uk