Hi,
I'm not sure about the allowance. You can try asking on Seller Central:
http://community.ebay.co.uk/forum/Seller-Central/7
or contact Customer Support:
http://ocs.ebay.co.uk/ws/eBayISAPI.dll?ContactCS&ref=1&topicrelid=5007580130&sid=5243536259&convId=0&ContactCsResultsPage=true
The rule on ebay is that you bid, you win, you pay! Your buyer has loads of feedback so should know better.
Unless you are a Business seller and it was a BIN you are not obliged to cancel.
If you have sent them a mutual cancellation request then there's a risk they don't agree so you won't receive the final value fee credit. Plus they don't receive a strike on their account and can still leave feedback.
If you haven't sent mutual, then you should open an Unpaid Item Dispute 4 days after listing end so you get the final value fee credit, the buyer gets a strike and they are prevented from leaving feedback:
http://pages.ebay.co.uk/help/sell/unpaid-items.html
Incidentally when you do relist, you MUST change the method of postage to Special Delivery Next Day. Normal post and Recorded only covers for up to £46 in the event of loss/damage through R.M. Keep the receipt/tracking number somewhere safe for a minimum of 12 months as credit card chargebacks can occur months down the line.
Such items are also targeted by scammers! Info. here:
http://members.ebay.co.uk/ws/eBayISAPI.dll?ViewUserPage&userid=redalligator1

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