Posted by on 2 April 2010 | 28 Comments

From an income tax point of view you should consider using any remaining tax free personal allowances and lower rate tax bandings to maximise your tax position. The basic personal allowance for 2008/09 is £6,035; and for those aged over 65 this can be in excess of £9,030. 

Investors should be looking at using Individual Savings Accounts (ISA's) tax breaks before the 5 April deadline. Individuals can put up to £7,200 into ISA's per tax year, of which £3,600 can go into a cash ISA. Although interest rates are low cash ISA's are very attractive because interest is tax free. Higher rate taxpayers can significantly improve their returns as an ISA paying 3.5% interest is equivalent to a normal savings account earning 5.8%.  

For Capital Gains in 2008/09 the Annual Exemption is £9,600 which means that there is no tax to pay on the first £9,600 of gains made. If you have potential gains in 2008/09 you may want to look at disposing of the asset before 5 April in order to trigger the gain to use your annual allowance. Correspondingly if you have already made gains in 2008/09 but have assets with potential losses you may wish to dispose of the assets before 5 April so that you can offset the losses against your gains.  

Those with surplus assets and dependents should consider using remaining Inheritance Tax (IHT) tax free allowances. Individuals can make gifts of up to £3,000 per tax year completely free of IHT - regardless of whether they survive the seven years following the gift. In addition if last year's allowance was not used a gift of £6,000 may be made completely free from IHT as long as it is made before 5 April. 

Company owners may consider the extraction from or retention of monies in their business prior to 5 April in order to obtain a tax advantage. Consideration should be given to dividend policy and remuneration planning. Particular care should be taken in this area and we would urge you to take advice before action is taken as a number of taxes and issues, both business and personal, are involved. 

Entrepreneurs and private company investors should consider the timing of their investments in Venture Capital Trusts (VCT's) and Enterprise Investment Schemes (EIS's). Income Tax relief may be available on investments, at 30% and 20% respectively.You should consider whether your tax position may be enhanced by making an investment prior to 5 April. EIS investments can also enable the deferment of Capital Gains made prior. Timing is everything and the looming 5 April deadline may be an important one. 

For individuals that are not domiciled in the UK for tax purposes there are various action points to consider prior to the 5 April deadline. The planning and timing of remittances of income or gains to the UK from overseas is particularly important.

This is not an exhaustive list of all the issues that should be considered prior to 5 April. It is intended to prompt consideration of some of the basic tax planning points.

Please contact us for specific advice.