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How can I save tax-free for my grandkids till they reach 18?
I discovered a couple of years ago that when my grandson reached 16, the Lloyds bank account in which I'd been saving for him had to be transferred to his name. The money was intended to help with his university education at 18 and I did not want him to be able to spend the money before then.
Where can I save for my other grandchildren where they could continue to earn gross interest but not be able to draw on the money until they are 18?
JA, Nottingham
Margaret: Banks have to cancel 'R85s' - the form allowing banks to pay interest gross - when children reach 16 because at that age they become responsible for paying their own tax. Of course they are liable to pay tax from the day they are born, but at 16 they have to fill out and sign their own R85.
If they don't, the bank has to deduct tax from the interest payments, though any overpaid tax is reclaimable at the end of the tax year. In Scotland, children can reclaim tax themselves at 16, but in England and Wales not until they are 18, so a parent or guardian would have to do it for them.
You held the account as a bare trust - written as 'Mrs Jones for Jeff Jones' - and, had he known, your grandson could have withdrawn money even before he was 16. A Child Trust Fund, available for children born from 1 September 2002 onward, is different because a child takes control of it when he she turns 16, but cannot withdraw any funds until 18.
To get around the problem for your other grandchildren, Lloyds suggests buying a fixed-term three-year bond when they are 15, or setting up a personal trust account with yourself, but not the child, as trustee. The bank would then open a savings account which only you control - but beware of legal costs and possible tax payments.
You could go to the other extreme and invest in stakeholder pensions, with added tax relief, which no one can access until they're 55 - but I'm not sure what your grandchildren would think.
Threatened over a debt I had already paid in cash
A year ago, I lost my job and couldn't make payments to my Barclaycard for six months. I owed £1,700. I then got a new job and wanted to clear the debt, but could afford only £1,200. I offered this as a full and final settlement to Mercers, the debt collector, which agreed, as long as I paid within seven days. I went into my local Barclays, paid in £1,200 in cash to the account number I had been given and the cashier gave me a stamped receipt.
I heard no more until August when I received a letter from Lowell Financial informing me that my debt had been sold on to it. The letter said I had to pay £1,700 or it would take legal action. I explained and sent the receipt. I have mailed and faxed them but they claim they have received nothing and constantly inundate me with calls and text messages saying I must pay the full amount.
ML, London
Margaret: What a good job you kept that receipt. It proved to Barclaycard that you had paid in the money. The bank has now found the paying-in slip showing your personal card number, but it did not include Barclaycard's bank account number, where the money should have gone in the first place.
From there, Barclaycard would have transferred it to your own account and told Mercers that the debt was cleared. Instead it is probably still sitting in a suspense account somewhere. Barclaycard has now called off Lowell Financial and marked your account as settled.
Burglary insurance only covers permanent homes
My mother spent her final few months being shuttled between her home and hospital. I live in London and my sister in Barbados, but we based ourselves at our mother's house during this time.
Two days before she died, her home was burgled. Co-operative Insurance paid for the stolen items that belonged to my mother but not for any that belonged to me or my sister, including cash, an iPod and a mobile phone. It argues that we are not covered because we were not permanently resident there. But we had moved to her house to be permanently close to her during her final illness.
LZ, London
Margaret: You really cannot argue that you permanently lived at your mother's house - you both returned to your own homes after her death. It may seem a harsh decision by Co-operative, but your possessions were just not covered by this policy.
You have now contacted your own home insurer, Norwich Union Direct, which will pay for your stolen items under the 'possessions away from home' section. Unfortunately, your sister does not have this cover, neither did she buy travel insurance for her time away from Barbados.
Wine offer with a sour aftertaste
I bought 12 bottles of wine from Sainsbury's wine club in an offer that included a £30 voucher. Sainsbury's did not deduct the £30. The wine club said it had sent me the voucher by mistake and this was not redeemable against the purchase. I would not have bought the wine without the voucher.
MB, Ferndown, Dorset
Margaret: Sainsbury's says the wine club is run by Nectar, but Nectar passed me to Direct Wines, which supplies the wine. As the voucher was free, you paid no money so have no contract with any of these companies. That means you have no grounds on which you could force them to honour it.
But, having made a mistake, any company should let customers use a modest voucher because it will have influenced their decision to buy. Direct Wines has now refunded £30 as an apology.
However, this does not always happen. Last May, Virgin Trains intended sending a test email to a handful of people offering them a luxury day out. By mistake it went to its entire customer list. Virgin sent a correction within five hours and offered recipients the opportunity to enter a prize draw for one place on the special day. The Advertising Standards Authority investigated, accepted it was a genuine error and did not force Virgin to give everyone a day out.
• Email Margaret Dibben at money.writes@observer.co.uk or write to Margaret Dibben, Money Writes, The Observer, 3-7 Herbal Hill, London EC1R 5EJ and include a telephone number. Do not enclose SAEs or original documents. Letters are selected for publication and we cannot give personal replies. The newspaper accepts no legal responsibility for advice.
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