MONEY NEWS NOVEMBER 2013
Tax break for married couples; free Eye tests in England; Cashing a pension pot; Debit card account scam

 TAX BREAK FOR MARRIED COUPLES

A third of the married couples who will benefit from the Government’s plans to cut tax for some married couples will be over state pension age. But those over 80 will be excluded.

The new ‘marriage tax allowance’ will begin in April 2015 and allow the transfer of up to £1000 of an unused personal allowance from one spouse or civil partner to the other. Unmarried couples will not be included.

Each year we can have a certain amount of income before any income tax is due. It’s called the personal allowance. If your income is below that then part of your personal allowance is said to be ‘unused’. There have long been calls for married people to be able to transfer that unused part to their spouse. From 2015/16 they will be allowed to transfer up to £1000 of an unused personal allowance to their spouse.

By 2015/16 the personal allowance will be around £10,200, and slightly higher for those born before 6 April 1948. If one spouse’s income is less than that they can transfer some of the extra to their spouse. But it will only be allowed if that spouse does not pay higher rate tax. So in 2015/16 their income must be less than around £42,400.

If the maximum £1000 is transferred then the partner who receives it will pay £200 less tax, which will actually be paid as a rebate after the end of the tax year. Couples will have to apply together online. Four million couples will benefit and just over a third, 1.4 million, will be over state pension age. However, anyone aged 80 or more on 6 April 2015 will not be included as they can already get a married couple’s allowance worth up to £791 a year.

Eye eye
NHS England is to review its procedures after a Kent pensioner successfully challenged a £120 fine imposed by his local Primary Care Trust (PCT) after he had two eye-tests paid for by the NHS in the space of a year. The Trust that imposed the penalty said that the standard interval between eye-tests should be two years.

Keith Valentine was looking at reading glasses in Boots when he accepted an invitation from staff there to have an eye test. About a year later his own opticians invited him for an eye test which he also accepted. Within a few weeks he got a letter from the West Kent PCT charging him £20.70 for the test and adding £100 penalty. He paid up after being warned he could face a further £50 penalty if he delayed. But he challenged the decision to the Health Ombudsman. In a tough judgement the Ombudsman said there had been no breach of any law. Keith had been recommended the test by an optician he was entitled to have it free. The Ombudsman told the PCT to refund him. NHS England has agreed to review its procedures.

The rules are different in other parts of the UK. But if you qualify for free eye tests and one is recommended by an optician you should not have to pay. If you have been fined in the past complain to the Ombudsman.

Small pension pots
Many people reach their 60s with very little saved up for a pension. In some circumstances you can take a small pension pot as cash rather than converting it to a tiny pension. If the total value of all your pensions is £18,000 or less you can take the whole lot in cash. A quarter is tax-free and the rest taxed as income, usually at 20%. It is called ‘trivial commutation’ and can be done at 60 or older. It can only be done once. Another completely separate rule allows up to two very small pots worth no more than £2000 each to be cashed in regardless of how much total pension provision you have.

The valuation of a personal or money purchase pension (usually called ‘defined contribution’ or DC) is straightforward – the scheme will tell you what its worth. But if the pension is in a scheme which pays you a proportion of your salary (called ‘defined benefit’ or DB) then the annual payment has to be converted into a capital value by multiplying it by 20. So a pension that would be £900 a year will be valued at £18,000. And one of £100 a year would be valued at £2000.

More details www.hmrc.gov.uk/pensionschemes/small-pen.htm

SCAMWATCH
Some frauds are big and devastating, others small and annoying. Finding a direct debit coming out of your account that you did not authorise is in the latter category. But there is some evidence of a growth in direct debits being taken out on the wrong account. A fraudster uses the target’s sort code and current account number to order goods or services for themselves online or on the phone. They give their own address and get the items delivered but the victim is left paying the direct debit. The retailer is supposed to check that the account number tallies with the name they are given – but not the address – and not all do that. When the direct debit instruction arrives at your bank it doesn’t even check the name – it just applies the payment to the account number.

The direct debits are operated by BACS, which the banks own. It insists the number of such incidents is small and should not happen if procedures are followed correctly. But clearly they do. It should be simple to track down the people committing this crime but the small amounts involved make it highly unlikely the police will bother. So it is up to us to check our bank accounts for strange direct debits. The Direct Debit Guarantee means the bank has to reimburse victims in full and at once. And although we should be careful who gets our bank account details, they are on every cheque and known by everyone who pays money into our account.

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