Telecom
On July 7th, I think, you published tables showing how shares in Telecom Eireann were to be allocated depending on the value of shares requested. This was expressed in percentage terms. For example, if £5,000 worth of shares were sought, the quota would be 90 per cent; for £7,500, it would be 80 per cent, and so on.
Having previously registered my interest, I applied for three batches of £6,000 worth of shares on behalf of my wife and children. I have been allocated £4,500 in each case.
When I finally succeeded in getting through to the freephone, I was told the figures represented bands - any application between £5,000 and £7,500 would receive £4,500 worth of shares. If this is so, your article was grossly misleading. Based on that article, I had assumed the allocation would be pro rata, in which case I assumed I would receive 86 per cent of my application. I feel there's something wrong here and I'd really appreciate any assistance in sorting it out.
Mr M.S., e-mail
Another dissatisfied Telecom shareholder . . . Unfortunately, in this instance, the fault lies in the application you made for Telecom Eireann shares and not with Telecom itself or with us here at The Irish Times.
When you registered your interest in acquiring Telecom shares, you received a mini-prospectus and, later, an application form for shares. The documentation accompanying that form indicated certain restrictions on the amount of shares for which you could apply. These sums ranged from a minimum of £250 (€317) to a maximum of £100,000. They were £250, £300, £400, £500, £600, £700, £800, £900, £1,000, £1,250, £1,500, £1,750, £2,000, £2,500, £3,000, £4,000, £5,000, £7,500, £10,000, £15,000, £20,000, £25,000, £35,000, £50,000, £75,000 and £100,000.
As you can see, there was no provision allowing you to apply for £6,000 worth of shares. In the circumstances, Telecom could have returned your form(s) to you as they were incorrectly completed. Doing so may well have led to you missing the deadline for correctly completed application forms. Instead, Telecom and its advisers decided to scale incorrect application amounts back to the next recognised sum below that applied for in cases such as yours.
For you, this meant your application was scaled back to three batches of £5,000. For those, who might wonder why applications were rounded down and not up, the answer is simply that no one would have the authority to commit you to spending more than you had already indicated in the form.
When the allocation of shares was decided, those people applying for £5,000 were allocated 90 per cent, or £4,500, if they had registered their interest. At a price of £3.07 (€3.90) per share, this meant you received three batches of 1,465 shares worth £4,497.55 each.
People who did not register an interest would have received only 54 per cent or 879 shares worth £2,698.53.
This rounding exercise is probably what was meant by the "bands" referred to when you contacted the Telecom share freephone. They were correct in saying everyone who applied for between £5,000 and £7,500 received an allocation of £4,500. This is the amount to which they were entitled at the recognised £5,000 "band".
Share split
Would you please advise me on what date Bank of Ireland split their shares and at what price they stood at the time? Was this very low profile or am I asleep?
Mr J.H., e-mail
Bank of Ireland were split on a two-for-one basis on Monday, July 19th last. The closing price of the shares on the last trading day before the split (Friday, July 16th) was €18.10 (£14.25). The shares jumped 20 cents on the first day after the split from €9.05 to €9.25. They have since slipped back.
As you say, the decision to split the shares seems to have passed unreported in the brouhaha over the proposed merger with Alliance & Leicester, although I am sure the bank followed all the procedures required of it before making the move in the Irish Stock Exchange.
Mortgage relief
I am somewhat confused over mortgage interest relief. In assessing the tax payable by my husband for the year 1998/99 and using the form on the back of The Irish Times Budget supplement, I calculated that I was due relief of £922.40. When the assessment came back from the Revenue Commissioners, it showed a figure of £221.52. While there have been small differences in the past between our calculations and theirs, this time the gap is unusually large. Can you explain the difference?
Mrs McC., Dublin
There is nothing wrong with the way you have worked out the mortgage relief due to you. It is simply that you have missed one step. As a result, as you probably feared, the Revenue figure is correct and you are worse off than you thought to the tune of almost £700.
You and your husband jointly paid interest of £1,403 for the year in question. You are not first time buyers so you are entitled to claim relief on 80 per cent of the interest paid up to a maximum of £5,000. In your case, 80 per cent of £1,403 comes to £1,122.40. From this, you then have to deduct a further £200, leaving you with the figure of £922.40 which you mention in your letter.
The next crucial element, which you did not include, is that this relief is allowable at the standard rate of income tax - 24 per cent. Twenty-four per cent of £922.40 is £221.38 and that is, I guess, the figure the Revenue Commissioners has allowed you to offset your income tax bill for that year.
Mortgage interest relief used to be allowable at the taxpayer's higher, or marginal, rate. However, following the example of Britain, this has been gradually phased out, reducing the efficacy of this relief for taxpayers. The reason this was done is that it was felt the former system unfairly favoured higher wage earners.
Please send your queries to Dominic Coyle, Q&A, The Irish Times, 11-15 D'Olier Street, Dublin 2 or e-mail to dcoyle@irish-times.ie. This column is a reader service and is not intended to replace professional advice. Due to the volume of mail, there may be a delay in answering queries. All suitable queries will be answered through the columns of the newspaper. No personal correspondence will be entered into.
