The resolution most of us would like to make is to give the taxman less of what he craves for. Assuming you don't want to take the drastic step of earning less, there are ways to reduce the amount you contribute to the ever-open coffers of the Inland Revenue. Many are simple family fiscal housekeeping measures.
The key point to remember is that everyone has a personal allowance - pounds 4,045 for the coming tax year - which is the tax-free amount every man, woman and child can have. Then income tax starts to bite - the first pounds 4,100 of taxable income is at the 20 per cent rate before the individual moves on to the 23 per cent and later the 40 per cent rate.
So is there scope for you to share income with your spouse if he or she doesn't earn - or earns very little? Two obvious possibilities (assuming the wife is the non-earner) is to let her hold any investments or deposit accounts and so get the interest. Or look at employing her or taking her into the business if the husband is self-employed or has his own small company.
The same principles work if it's the husband who is the low or nil-earner, with the added point of looking at the married couple's allowance (MCA). That is only worth around pounds 274 a year now, but is still worth having and it goes automatically to the husband unless the couple do something about it. It can be split or passed to the wife. The unmarried may be able to claim the additional personal allowance if there are children - this is worth the same as the MCA and again can be split in the best way.
And what of children's tax position? They too have their personal allowances, although any income which comes from an asset gifted by a parent is taxed on the parent if it exceeds pounds 100 per annum. Mind you, other family members are not caught by this, so perhaps Granny can help and give them some income-producing assets? (Giving the kids loadsamoney now may not be what you want, so you may wish to refer back to a previous article in this series on trusts.)
In all cases, bear in mind that the non-taxpayer can register to get interest income gross rather than with tax deducted. Well worth getting the form from the building society, rather than trying to do a tax return.
Turning to Capital Gains Tax (CGT), similar principles apply of splitting holdings with your spouse. Then, could you "bed and breakfast" some shares to use up your annual exemption this year and give yourself a better base value for the future?
If you're lucky enough to have some share options, look carefully at their position - could you usefully exercise some now and realise gains in this tax year rather than next? (But make sure the profit will count as capital and not give rise to an income tax charge - some options will and that could ruin some careful planning.)
If we're into pre-year-end mode, don't forget Inheritance tax. If you have it in mind to give assets away, consider making a gift before 5 April 1997 if you haven't yet utilised your gift exemption of pounds 3,000. And company car drivers should check whether that April business trip should fall before or after 5 April.
There is also a range of tax-free investments that you can go for, though many are not available to the children. Tessas are well known: the interest you receive will be tax free if you leave it in the account for five years. PEPs are very much in vogue: they give a tax-free environment for your shares and bonds. They still carry risks and costs, of course, but they can work as part of long term saving - perhaps earmarked for school fees? There is an annual PEP amount available - pounds 6,000 for the basic PEP. Then there are National Savings opportunities available for all. We'll survey all this in a future article.
Don't forget the greatest tax shelter - pensions. Whatever changes might happen in the future, contributions now to approved schemes are tax deductible. There are limits to what you can toss in - typically 17.5 per cent of earnings, though the older (and here "older" can start at 36) can contribute more. If you have a personal pension scheme, check that you are making the most of the relief available. If you are in your employer's scheme there may still be scope for additional contributions.
John Whiting is tax partner at Price WaterhouseReuse content