Gifts that keep giving
Christmas presents needn’t be disposable tat, says Ruth Jackson. Here are some great gifts that will last.
Christmas presents needn't be disposable tat. Here are some great gifts that will last.
Although it might not make for the most interesting-shaped present under the Christmas tree, money is a great present. Whether you choose to invest some cash, top up someone's savings, or follow the lead of a wise man and give gold, it can be the gift that keeps on giving.
An easy option is to buy Premium Bonds from the government-backed National Savings & Investments as a gift. The bonds don't earn interest, but they are entered into a monthly prize draw to win up to £1m tax-free. The prize-fund rate is currently 1.4%, meaning if you are as lucky as the average person you should win enough prizes to equate to a 1.4% annual return. If you want to buy Premium Bonds as a gift, you can only do so for your children or grandchildren, with a minimum purchase of £100 (this falls to £25 in March). The recipient can withdraw the money whenever they like.
Alternatively, anyone can add money to a child's Junior individual savings account (Isa) if they have one. This money is locked away earning tax-free returns until the child turns 18, when it converts to an adult Isa that they can access. You simply need to ask the parents for the account details so you can pay money in. Just check your gift won't push the annual deposits over the Junior Isa limit (currently £4,260).
Another option is to give something you think will increase in value over the years. A book lover will be thrilled by a first edition of their favourite novel, and it could be a successful investment. First-edition Harry Potter novels sell for as much as £50,000, but many Penguin Classics change hands for around £100. Rare Lego sets also sell for thousands of pounds, so purchasing that Harry Potter Hogwarts Great Hall this year could mean your recipient makes a profit selling it on in years to come. The Millennium Falcon set released in 2007 for £350 recently sold for £8,000.
Finally, a wise man still gives gold at Christmas as the price continues to rise; it has appreciated by 75% over the past decade. A gold sovereign costs around £240. See here for a guide on how to buy physical gold.
Steer clear of gift vouchers
There are many ways to give money at Christmas, but one to avoid at all costs is gift vouchers. It's an industry that's worth £6bn a year, but they are a truly terrible purchase. Spending on all types of gift cards rose 6.6% in 2017, with digital cards and e-vouchers now making up 9.4% of the overall market, according to Tim Bowler on BBC News. But the problem is that a huge number of gift vouchers are never used: £300m is thrown away every year.
Some are forgotten about, while others expire. Most have a two-year expiry date, meaning your money goes down the drain if unused. As many as 6.7 millions Britons have lost money on gift cards, either because they failed to spend them before the deadline or the retailer went bust, according to research by comparison site GoCompare.
With several big names going into administration this year, this can mean a gift voucher is a high-risk purchase, as in that scenario the money on the gift cards is lost. People with gift cards for Toys R Us, HMV and Jessops all found their cards were suddenly worthless as the chains went into administration. Even a last minute buy out may not rescue your card. Sports Direct's owner Mike Ashley took months to decide whether to honour House of Fraser and Evans Cycles gift cards after he took over the stores (he eventually did).
While gift cards allow you to look as though you've given the present a bit of thought, cash in an envelope might well end up being the better present, says Matt Sanders from GoCompare Money. "There are no restrictions on where it can be spent, it doesn't lose its value if a company goes out of business, and it can always be saved for a rainy day."
Pocket money... CGT headache for off-plan buyers
Thousands of people are "needlessly" paying inheritance tax (IHT) bills every year because a "widely used tax loophole has been all but forgotten," says Harry Brennan in The Daily Telegraph.
We all have a personal IHT band of £325,000 that we can pass on before IHT at 40% is due. Over a decade ago, if couples wanted to pass more than that amount to each other, they would set up IHT-exempt discretionary trusts that allowed people to ring fence up to £325,000 to pass on to their spouse free of tax on their death.
In 2007 a new rule allowed spouses to transfer unused allowances when one partner dies, meaning the trusts were forgotten about. "However, widowed spouses who remarry can still use it to give themselves an additional IHT allowance of £325,000."If a spouse inherited their partner's IHT allowance, they would have a combined allowance of £650,000. If they then remarried and used a discretionary trust to protect that allowance, their surviving spouse could end up with a £975,000 allowance.
A court ruling last week has left people who purchase off-plan houses facing sizeable capital-gains tax (CGT) bills, says David Byers in The Times. Desmond Higgins paid a deposit on a two-bedroom London flat in 2004, but couldn't move in until 2010 owing to construction delays. When he sold it two years later, HM Revenue & Customs (HMRC) handed him a CGT bill of £61,383, which included the gain made between 2004 and 2010, before the flat had even been built.
He was told he wasn't eligible for main-residence relief because he hadn't lived in the property until 2010 despite the fact that it was impossible to live in before that date as it hadn't existed. Now the court has ruled in HMRC's favour, which could have wide tax implications for buyers suffering construction delays. (Note that most people who buy off-plan will be eligible for a concession that allows for up to two years of building before you move in, without any loss of private-residence CGT relief).
O2 is offering its 25 million pay-monthly and small and medium-sized business and mobile-broadband customers a credit of two days' worth of charges as a goodwill gesture after a UK-wide outage left them unable to get online, says Mark Sweney in The Guardian. The fault knocked out 3G and 4G services and hampered people's ability to make calls between Thursday and Friday last week. Customers should receive the credit by the endof January.