Broken camera, or broken contract?

Q. I purchased A Canon IXUS 120IS camera from Camerabox in June 2010 with a 2 year’s full warranty and a lesser 5 year one. My camera is now 18 months old has developed a few faults shuts down error 32, stores pictures up-side down and the picture jumps around when focusing. Within 2 years I am supposed to send camera to them for repair and get instructions from their web site not successful yet as I write this. I cannot reach their site directly but do when I put it on a search. I hear they were in administration in June. Is this still the case? My camera still produces good pictures I just have to keep re switching it on and orientate every picture. Should I return it to them at address I received when I bought it? Can you shed any light on their current status, or give me any advice please.
Geoff Whitby

Your question raises a few interesting points. Firstly, as far as I am aware Camerbox is indeed in administration and there is little chance of you getting money back from them. That doesn’t mean all is lost however and there are two options with regard to the payment you made, depending on how you paid for the camera. If you used your credit card then you may be able to make a claim from the credit card company under Section 75 of the Consumer Credit Act. This allows you to claim against the credit card company (and some debit cards) if the contract is broken as it may have been in this case if the camera is indeed faulty. For a claim under Section 75 to be valid the goods need to cost more than £100 and less than £30,000.

If you used a debit card than you may be able to ask your bank to deal with a refund by way of a ‘chargeback’ on the card. This effectively allows the transaction to be reversed. If you want to claim using this method then you should speak to your card provider in the first instance.

As far as the warranty is concerned my first question would be to ask who was providing it I would also want to ask who is providing the 2-year Warranty – Camerabox or Canon? If the former then you are out of luck but if it is Canon then it may be that you could send the camera back to them and ask for their opinion, especially if the fault is not something that you would expect from a camera less than 2 years old.

I hope this helps

Questions of long-term care and short-term pensions

Q1. We have our own home and some investments but my husband turned 70 recently and has had a few small strokes. What concerns me is what can we do to avoid all of the value of our home and investments drain away in care costs should either of us need to go into care? We want to be able to live on in our home or perhaps in a smaller home should either of be left on our own and also leave something to our family. We have lived very carefully over the years and so have a bit of money saved and don’t want our family to lose the lot. If my husband died I have no private pension so care home costs would soon drain any savings away should I then need care myself. I know there are such things as trusts but are they a good idea given the way money is being devalued all the time and also are they expensive to run? I hope you can give me some good advice so that I can have more peace of mind.
IJ (full name witheld by request)

A.It’s difficult to give you any specific advice here Isobel without more detail. I don’t know where you are writing from, for example, and the rules for the provision of residential care, and the cost of care, are different north and south of the border. I don’t know the value of your estate and whether you need to be considering measures to reduce the inheritance Tax that your family may have to pay on your death, or whether you are more worried about the asserts you have being swallowed up if you have to pay for your own residential care. I would happily give more detailed advice if you want to come back to me with more information.
You mention Trusts, however, and I presume that you mean trusts that are available to ‘transfer’ assets into the names of other family members to avoid the need for you to have to pay for your own care? If that is the case then I would say that they can be expensive to set up and I think that the jury is still out on whether they are effective in ensuring that your assets are safely out of the reach of the local authority which is, not to put too fine a point on it, what you are trying to achieve.

Q. Thank you for getting back so promptly to my query. We live in Perthshire and have two of a family one of whom is married. Our house value might just push us in to Inheritance tax bracket though at present I wouldn’t see us getting its proper value as houses round about are not selling. I want to know if I were left and have no private pension would I be forced to sell the house and use up what money I do have in savings to cover the cost of care should my husband ever need it? Our two children refuse to accept money from us saying they would rather we spent it on holidays etc but we do want them to get something from our savings and not have it all disappear in care charges. It does not seem fair. Please do not publish my name . Thank you

A. Here are a couple of answers I have given previously on the same topic that might help to ansswer your question.

“Q. My 94 year old mother is going into a care home soon. She owns a flat-worth approximately £55000, which has a small interest only mortgage of £9000 on it. What is the best way to fund the care without selling the house? Please do not mention my name.

A. I think that the house will have to be sold at some point since your mum has assets greater than the maximum allowed for ‘free care’. Having said that it may be possible to rent the flat out and use the rental income to pay the care home fees, although there is a mortgage that will have to be paid as well. It may be possible to ask your mum’s local authority if they will pick up the cost of the care home fees in the short term, effectively building up a debt that can be repaid out of your mum’s estate on her death. Having said all of that, it may be cleaner to sell the house and invest the money using it as needed to pay the costs of care.

Q. Hi, saw the piece on financial advice on long-term care tonight. My father is in a care home in Scotland. He pays his care-home fees from his “savings” (house sale!) The bank manager told us that it is possible for him to gift £3000 to each of his children & £1500 to each grandchild, each year, which would obviously reduce his capital, without the authorities being able to question this. Do you know if this is the case? We don’t want to do anything dodgy, just want to know if this is correct!

A. The local authority will calculate the value of your father’s assets and if he has more than £22,750 then he will be responsible for all of the care costs. But you’re not allowed just to give money away so as to avoid paying for care. Your father can give money to whoever he likes, whenever he likes but if the local authority thinks he is only doing it to deprive himself of an asset so that he doesn’t have to pay for care then they will ignore the ‘gift’. But I think you may be mixing up two different sets of rules here. The £3000 that you refer to is an annual limit on money that you can gift to children without it forming part of your estate for inheritance tax purposes. Likewise a lot of people have it in their minds that they can’t give money away without it being counted as part of their asset base for seven years but once again that is an inheritance Tax issue rather than a care fee issue.”

Q2. I am a 43 year old Canadian woman, who moved to Scotland a year ago. I live and work here on an EU passport (born in Poland), pay all UK resident taxes. I plan to remain in the UK for 3-5 years, then move elsewhere in the world. Eventually, I will return to Canada and retire there. Should I bother paying into a UK pension scheme, or should I just save my money and invest it in stocks or bonds until I leave? Thank You for your advice!
Beata

A. You don’t say whether the pension you are considering paying into would be a personal pension or one offered by an employer. If the latter, and it’s not a condition that you contribute as well, then I would be tempted to join, since effectively it’s free money!
If, on the other hand, you are considering investing in a personal pension then I would be less likely to see it as a good idea, given the fact that you are only staying in the UK for 5 years or so. What you have to weigh up is the tax breaks offered by investing in a pension – any investments you make up to £50,000 per annum can effectively be made ‘tax-free’, although in reality what happens if that you will invest out of taxed income and claim back any tax paid on that income. This may vary slightly depending on the rate at which you pay tax – against the fact that you won’t be able to access the money until you are 55, and even then you can only take up to 25% of it as cash, with the rest having to be taken as an annual income, either by buying an annuity, or by using some sort of ‘drawdown’ from the fund.
On balance I would probably suggest that you make use of any tax efficient investments available to you, such as an ISA, and then you can take the money with you when you move back to Canada.
I say this without knowing anything about your existing pension arrangements or the potential you may have to arrange a pension when you go back to Canada that you may be able to use as a home for any pension money that you did build up over here

What can I do with my old pensions?

Q. I have three fairly old pension policies, into which I’ve not paid for the past few years. As a result of no longer paying in, the companies turned the policies into Life Assurance policies and so deduct monthly premiums from the capital within the policy. Well, I just see this as the total in each pot being reduced month on month and so feel I’d be better to ‘redeem/cash in’ I think they call this ‘mature’, the policies. I feel I could do better with the money by buying shares, or property even.
Can you tell me what are the things I should be thinking about before ‘pushing the button’ as it were? And is the taxman likely to take a cut, or are pensions exempt? I think the sums involved are around £7k, £15k, and about £80k in each of the pensions. And if tax is applicable, is there a way to reduce this down? Eg. By taking them out over a couple of years?
Thanks
Brian Wilson

A fair number of questions involved in this one Brian, so where to start?

First of all it’s unlikely the pensions will have been turned into ‘life assurance’ policies. Once a pension, always a pension as they say! But you are correct in what you say that if you have stopped investing into the pensions then the companies will still be taking a charge and if the rate of return is low then that will be eating away at any future growth.

You don’t say which companies have your money, or what type of funds you money is invested in and that would be one of the first things to investigate. Each company has a range of different funds that all carry different levels of risk and have had varying levels of success over the years in terms of investment performance. You need to make sure that the funds in which your money is invested match the levels of risk that you are prepared to take, and also that they are charging appropriately for that.

Money in a pension fund can be invested in a wide range of assets and can even be let in cash if you are close to retirement or particularly averse to risk. It is possible to buy individual shares or even commercial property with some types of pensions

Depending on the types of pensions you have it may be appropriate to roll them all into one since this will be easier for you to manage and may even bring in a bit of cost saving as well.

As far as tasking the money out as cash then it is only possible at 55, and even then only within limits. You should be able to take up to 25% of the fund you built up as cash, and this is paid tax-free. The rest you have to take as an income, and this income is determined by the size of your fund and your age. And it is taxable.

I think the starting point for you is to sit down with someone who understands pensions and look at your options. Check first of all how they will charge you for the advice they give. As them to look at the options for all of your pensions giving consideration to your age and potential retirement age, your current circumstances and your attitude to risk.

Your Questions

We’re going to use this page to answer the questions you send us at Moneysucks? What bothers you about your money and what annoys you as a consumer? What should you do with that huge lump sum that’s burning a hole in your bank account, or which loan should you pay off first? What’s the best way to sort our your monthly budget or how can you retire at 40?  Which retailers ofer great service and which ones couldn’t spell the word?  What do you do when your brand new laptop breaks down after a week or your Blackberry won’t let you send text messages any more. Whatever your money and consumer issues we want to help.

We’ll start with a question from David Yule:

Q. I have a question on the link between child benefit and the state pension. At the moment it is my understanding that a person receiving child benefit receives NI credit towards the 30 years required for a full state pension. As you know the child benefit will be removed for the person receiving child benefit if her husband/wife is a higher rate taxpayer- this seems unfair to have the wife/husband penalised in retirement for the spouse’s income. It may even be that when the carer retires she/he is not even married to the same person but has been penalised- do you know if that is the case- if so Money sucks!!

A. Good question David. My initial response would be that it’s not as simple as saying that someone receiving child benefit will automatically receive NI credit towards the 30 years required for a full state pension. There are other requirements that need to be satisfied before receiving NUI credit and these other requirements will vary from person to person. To be on the safe side I have asked the Department of Work and Pensions to look at your question and come back with a fuller answer so hopefully I’ll be able to get back to you soon. I know that there is a large scale review of the benefit system going on at the moment and it may be that any answer from DWP will reflect that but I should be in a position to answer you more fully next week.

Colin Kennedy asks a question about renting out a room in his property:

Q. I work in Crawley during the week but live in Scotland at weekends. I have a second home in Crawley and I rent out 3 rooms. I have a business which is dormant, but could I use this business as a vehicle to purchase my house in Crawley and rent it out to my tenants and myself? What benefits would I derive from this? Love the website and looking forward to your insight!

A. You could certainly use your business to purchase the property that you already own and then rent it out to others although presumably your business, if it is dormant, will not have the required funds and so effectively you would need to look at the transfer of the property to company ownership rather than your own unless your business can raise the funds to purchase the property from you.
Either way the first issue for you is that you are personally disposing of the asset and may be creating a capital gains tax liability for you since it is not your main residence.
Whether it makes sense for you or the company to own the property is in no small way dependent on your tax position. If you own the property then any rental from your tenants, after deduction of allowable expenses, will potentially be taxed at your highest rate. If the company owns the property then any profit will be liable to Corporation Tax but you may decide to retain the rest in the company until you need it. This avoids any further personal tax but means that you can’t use the money.
A further complication may be that if you transfer the property to your company, and you are a Director and employee of that company, then you may find that HMRC argue that you living in the property is a benefit in kind and that may have tax implications for you.
I hope you find this information useful but please come back to me if you have any further queries.

Jack Fraser asks an ISA question:

Q. I am the student who asked about the pension, but I would like to answer just another quick question on a different matter! If I use up my full £5100 cash ISA allowance with cash this tax year, does any interest gained on that count towards the allowance i.e. if I gained £4 and it went up to £5104 because of interest would I be exceeding the allowance?

A. Very simple answer to this question – no! The allowance relates to cash invested in the ISA – whether Cash ISA or Stocks and Shares AIS and any interest or growth in the value of your ISA won’t mean that you are exceeding your allowance, or eat into the next year’s allowance either.

Margaret Cunningham has come into some money and wants to know what to do with it.

Q. I have just inherited £22,000. The money is sitting in the Royal Bank of Scotland at the moment. Can you give me some advice how I should invest it, please?

Thanks and greetings from Germany

A. The answer to this one could go on forever and depends on so many different questions that I don’t know the answer to at the moment. These questions would include, in no particular order of importance:

Are you living in Germany and is the money in Germany or the UK?

Do you have debt that you could do with paying off?

How long will it be before you need the money?

How much risk do you want to take with your investment – are you an under the pillow type or is the 2.30pm at Cheltenham more your style?

Do you have other investments?

Could your pension do with a boost?

What is your income tax position?

So as you see it’s not an exact science. And these are only a sample of the questions you would want to consider before making a decision. The starting point is to examine your current situation and for you to decide what it is you would like the money to do for you. If you have any debt – mortgage or non-mortgage – then it might makes sense to pay that off since it might be costing you more in interest than you will receive on money you invest. If you have no debt and you want to put it away somewhere for a ‘rainy day’ then it would be a case of looking at how to do that tax efficiently and with a level or ‘risk’ that is acceptable to you and for a length of time that suits.

And Cathy Austin has a question on the finances of long-term care.

Q. I saw the piece you did on financial advice on long-term care on BBC the other night. My father is in a care home in Scotland. He pays his care-home fees from his “savings” (house sale!) The bank manager told us that it is possible for him to gift £3000 to each of his children & £1500 to each grandchild, each year, which would obviously reduce his capital, without the authorities being able to question this. Do you know if this is the case? We don’t want to do anything dodgy, just want to know if this is correct.

A. Maybe is the perhaps unhelpful answer! The £3000 and £1500 limits that your bank manager talked to you about are the maximum amounts that can be ‘gifted’ to children and grandchildren annually so that they don’t form part of your father’s estate for inheritance tax purposes – and there is often confusion about the rules on Inheritance Tax and the rules that apply to care issues. The local authority is not interested in IHT rules, only that your father hasn’t given money away to ‘deliberately deprive’ his estate to save him paying for his own care. So whether your dad gifts his children £3000 or £30,000 the local authority might want to know why. It may do his case no harm if he is able to explain that it is part of a tax planning exercise.