Money: It's time for new year's resolutions

Steps you can take before Tuesday's Budget

What can you do to save money before the Chancellor's Budget speech on Tuesday? Here are some ideas.

Don't panic. Doing anything just to try to save tax is rarely a good idea; doing it in a hurry is even less likely to be sensible. First consider whether it makes sense from the point of view of your overall personal circumstances, and then whether it might save some tax as well.

If it makes sense do it now, not later. Conversely, if you were going to do something tomorrow, don't put it off until after Budget day just in case the Chancellor reduces the tax cost. Taxes do go down as well as up, but not as often.

Buying a house? Stamp duty is a nasty extra, which is not optional if you are buying a house costing more than pounds 60,000. The rate for more expensive houses was increased from 1 per cent to 1.5 per cent or 2 per cent in 1997 - and then it went up again to a maximum of 3 per cent last year. I think it is unlikely to go up again this year, but if you are just about to exchange contracts you might want to play safe and get the contract signed by Tuesday.

Give it away? Gifts do not currently attract inheritance tax, provided you survive for at least seven years afterwards. This rule may well be tightened on Tuesday, so if you were planning to give someone a special birthday present, give it early this year. On the other hand, if you were hoping to receive such a gift, it may be more difficult to persuade the donor to accelerate their generosity - but you could always try.

Vary existing bequests? At the moment the terms of a will can be varied for up to two years after death by making a deed of variation. It is possible that the Budget will ban future deeds, so if you were thinking of making one, see a solicitor tomorrow morning.

Put it away? Putting surplus cash in a pension scheme is one of the most tax-efficient moves you can make, although you need to be sure that you won't suddenly want access to your cash. Despite annual rumours of Budget changes, contributions to pension schemes still qualify for tax relief at your highest rate (up to 40 per cent).

Start a PEP or Tessa? Both PEPs and Tessas will be replaced by ISAs from 6 April 1999. The principles are broadly the same (no tax paid on income from investments held in the ISA) but the investment limits are lower. You have until 5 April to decide whether you want to make a purchase in the PEP/Tessa "closing-down sale". If you are not sure, it could be worth putting just pounds 100 or so into a Tessa as this will give you increased tax-free savings capacity for the future. You can continue to put money into an existing Tessa in future years as well as starting an ISA. The same is not true of PEPs since only money put in by 5 April 1999 can stay within the PEP.

Look at National Savings? There are various National Savings investments available. The returns are reasonable (if not wildly exciting) and safe; some are paid tax free, which can be useful for the elderly or for gifts to children. The rates available are adjusted from time to time and could well be reduced again after Budget day, given recent falls in interest rates.

What else might happen? The long-heralded 10 per cent rate of income tax might be introduced in this Budget - if only because there is a limit to how often the Chancellor can mention this without actually doing anything about it. Another strong rumour is that child benefit may be taxed for higher-rate taxpayers - very difficult to administer without making complex changes to the way in which married couples are taxed. There is, however, no action you can take to prepare for either of these changes - other than crossing your fingers.

My final advice is to make a New (Tax) Year's resolution: consider all your tax planning options as early as possible after 5 April and don't wait until the 2000 Budget is upon us before taking action.

n Heather Self is a chartered tax adviser and a partner with Ernst & Young. She is the vice-chairman of the Chartered Institute of Taxation's Technical Committee.

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
Finacial products from our partners
Property search

EU to scrap roaming charges in 2017: European Commission under fire for taking so long to act

UK consumer groups complained that British holidaymakers face another two years of mobile phone misery before the law comes into effect

On the money: Yorkshire building society has demonstrated that it is taking the P2P industry seriously

Is peer-to-peer lending a risk worth taking?

The P2P industry must do more to shake off an unjustified image of being too complex and risky for the everyday saver, says Andrew Hagger

Generating grievances: Scottish Power's Longannet station in Fife

Questions of Cash: Scottish Power says it's sorry - again and again

Six of the energy company's customer have cause to blow a fuse this week

Will Patisserie Valerie be the portfolio's sweet spot?

Derek Pain: 'Patience is a virtue but maybe I should cut and run'

Derek's portfolio is currently suffering because of his failure to be more ruthless

There are now more than three million people in “severe problem debt”

Debt managers are misleading vulnerable people, warns watchdog

One debtor was given a repayment plan that would have taken 125 years to repay

Challengers are smashing the traditional high street banks when it comes to offering decent savings rates

Ignore the new breed of savings institutions and you'll lose interest

NatWest has ripped up its pledge to never be the last bank in town

NatWest pledged five years ago it wouldn't close the last bank in town. Now villagers have been told the branch shuts in September

When the last bank closes, local shops quickly go out of business

Under new state pension rules we will all be much worse off

Why did no one notice? The Government hides behind complexity, says Neasa MacErlean

Bogus Islington landlord scams public for £20,000 in fake deposits

It’s not just Islington... Simon Read warns renters and landlords about a nationwide fraud operation

Questions of Cash: The paperwork wasn't right so I was left high and dry with a broken washing machine

A reader encountered a problem with a Currys washer/dryer care plan

Borrowers should steer clear of established providers to get the best rates

Interest rates have never been cheaper if you want a five-figure personal loan but for lower-value loans it's a very different picture

Personal banking: Banking chiefs at NatWest and RBS insist that they are over the worst of the technical issues but customers are still complaining of payment issues. NatWest has waived overdraft fees and told customers they can withdraw £100 more than their limit over the next few days

People’s bank in crisis again: What should you do about the NatWest/RBS meltdown?

Thousands still waiting for payments to go through

The average UK household is set to hold close to £10,000 in unsecured debt by the end of 2016

If they don't get help, debtors face 30 years of financial hell

There are many people in dangerous debt who don’t seek advice

RBS/NatWest meltdown: some customers may have to wait until Saturday for their cash

Some 600,0000 payments have been delayed many of which could be crucial

Renters' warning: bogus landlords are tricking potential tenants out of thousands

An army of tricksters are using online websites to trap their victims

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Sales Assistant / Buyer

    £15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

    Recruitment Genius: Customer Service Advisor

    £15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

    Recruitment Genius: Compliance Manager

    £40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

    Day In a Page

    Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

    'The economic collapse has happened. What is at risk now is democracy...'

    If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
    The science of swearing: What lies behind the use of four-letter words?

    The science of swearing

    What lies behind the use of four-letter words?
    The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

    The Real Stories of Migrant Britain

    Clive fled from Zimbabwe - now it won’t have him back
    Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

    Who will fill Donna Karan's boots?

    The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'
    10 best statement lightbulbs

    10 best statement lightbulbs

    Dare to bare with some out-of-the-ordinary illumination
    Dustin Brown: Who is the tennis player who knocked Rafael Nadal out of Wimbeldon 2015?

    Dustin Brown

    Who is the German player that knocked Nadal out of Wimbeldon 2015?
    Wimbledon 2015: Nick Bollettieri - It's time for big John Isner to produce the goods to go with his thumping serve

    Nick Bollettieri's Wimbledon Files

    It's time for big John Isner to produce the goods to go with his thumping serve
    Tour de France 2015: Twins Simon and Adam Yates have a mountain to climb during Tour of duty

    Twins have a mountain to climb during Tour of duty

    Yates brothers will target the steepest sections in bid to win a stage in France
    John Palmer: 'Goldfinger' of British crime was murdered, say police

    Murder of the Brink’s-MAT mastermind

    'Goldfinger' of British crime's life ended in a blaze of bullets, say police
    Forget little green men - aliens will look like humans, says Cambridge University evolution expert

    Forget little green men

    Leading evolutionary biologist says aliens will look like humans
    The Real Stories of Migrant Britain: An Algerian scientist adjusts to life working in a kebab shop

    The Real Stories of Migrant Britain

    An Algerian scientist struggles to adjust to her new life working in a Scottish kebab shop
    Bodyworlds museum: Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy

    Dying dream of Doctor Death

    Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy
    UK heatwave: Temperature reaches 39.8 degrees on Central Line - the sweatiest place in London

    39.8 degrees recorded on Tube

    There's hot (London) and too damn hot (the Underground). Simon Usborne braved the Central line to discover what its passengers suffer
    Kitchens go hi-tech: From robot chefs to recipe-shopping apps, computerised cooking is coming

    Computerised cooking is coming

    From apps that automatically make shopping lists from your recipe books to smart ovens and robot chefs, Kevin Maney rounds up innovations to make your mouth water
    Jessie Cave interview: The Harry Potter star has published a feminist collection of cartoons

    Jessie Cave's feminist cartoons

    The Harry Potter star tells Alice Jones how a one-night stand changed her life