I sold a house in November 2008. When the final calculations were made, my lawyer was asked by Halifax for an additional £2,695 to cover the mortgage.
We were in Australia, so my now deceased father-in-law took the money to my lawyer and the sale was done.
Over the years, several collection agencies have said I owed £5,000, although each time my lawyer assured me that he had handled it.
Historic debt: A reader is chased by Halifax for a mortgage debt tied to a home he sold 13 years ago
On his advice, I contacted the Financial Ombudsman. Halifax then stated that my attorney had not paid the extra money and so it was still owed.
KA, Hilton, Cambs.
Tony Hazell replies: £2,695 is owed on your Halifax Final Repayment Statement.
A letter from your lawyers at the time suggested this was a surprise and said they urgently needed a check.
But what happened next?
Halifax says it received £166,000 when it took £168,012.50 to close the mortgage. It waived a small insurance premium, leaving a deficit of £1,988.61.
It was agreed to waive an early repayment penalty of £3,230 if the mortgage was fully repaid by January 2009. But when this did not happen, the amount owed rose to £5,218.61.
In December 2008, the mortgage was taken out and the levy was removed when it was sold.
Your lawyer argues that Halifax would not have done this if it had not received the money. But Halifax says this isn’t how it worked. What actually happened was that the debt was transferred for collection.
Halifax says if the attorney could provide evidence of making the payment, he would investigate further. There must be financial records and the money paid by your father-in-law must be deposited in a customer account.
But tell me the lawyer says he can’t find any records and you should just tell Halifax to leave. That advice is neither professional nor in your best interest.
I went back to Halifax and made a strong argument that you were clearly in the middle and maybe it could accept a partial payment as a compromise.
But Halifax has gone further. A spokesperson said: “If we look at all the circumstances, we will go one step further and waive the entire amount and have informed the collection agency about it.” This really goes above and beyond, so well done, Halifax.
Prudential’s Tax Threat in Bond Withdrawals
In October 2000 we invested £21,200 in a Prudential Prudence Bond and topped up £10,600 in May 2001.
We have received 5 pc of payments annually. Pru says that if we continue our current withdrawal level after October 30, we may have to pay additional income taxes.
The only way to avoid this seems to be: (a) to reduce the amount we withdraw annually; or (b) take no withdrawals in 2021-2, and then take withdrawals every other years.
We both pay taxes at the normal rate. The financial advisors we approached refused to accept us as clients because of our ages – 87 and 83.
Tony Hazell replies: It’s good to know that your local financial advisors take their responsibilities seriously!
Obviously you don’t have enough money to make them feel like your pockets are worth diving into.
After I gathered more details about your income, I presented your problem to Danny Cox of Hargreaves Lansdown, who is extremely well versed in this type of investment.
Your 5 percent annual income over 20 years is treated as a return on your capital. The present value of the bond is £32,297, so about £16,000 in profit each over 20 years.
Neither he nor I see any impediment for you to withdraw as much as you want without paying additional tax. Gains are already taxed at the base rate within the bond.
When deciding whether to pay additional tax, the profit is divided over the number of years you have invested.
You only pay extra tax if the final figure pushes you into the higher band, which starts at £50,000 in England and Wales.
You tell me that your only other income is your state pension, so you would have to make a lot more than £16,000 in 20 years to get a tax bill.
Mr. Cox says that as long as you have no other income, you can continue to receive your 5 percent tax-free.
But he adds, “Since their returns are taxed at source in a bond, why not cash it in, put it into an Isa and not worry about taxing future earnings or profits?”
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