Cruellest month? April is fine for your finances

Francesca Lagerberg on tax planning ahead of the year-end

Endless publications are available to help us inch our way towards better physical health, but there is less guidance on getting into good financial shape. Just as gyms and health clubs are packed out after Christmas and just before the summer holidays, now is the time of year to be putting your finances through their paces.

Endless publications are available to help us inch our way towards better physical health, but there is less guidance on getting into good financial shape. Just as gyms and health clubs are packed out after Christmas and just before the summer holidays, now is the time of year to be putting your finances through their paces.

Two important events are on the horizon. Coming up is the end of the tax year (5 April), which means it's our last chance to take advantage of some of the available exemptions and reliefs. We are also nearing the Budget, when the Chancellor may have a few surprises in store.

With tax planning, it's best to start with the simple things. Maximise your family's income by ensuring that you and your spouse make use of lower tax bands and all your tax-free allowances. This can be achieved by transferring savings accounts, shareholdings or other assets to the lower-earning spouse or into joint names. It may be too late to reduce the tax bill for the current year, but you can at least save money in 2003-04 by acting now.

Take a careful look at your circumstances and review your will. Does it still do what you want it to and does it take account of your current situation and assets? Consider taking advantage of tax regulations that let each person give away £3,000 per tax year free of inheritance tax. If you can afford such gifts and have not made them in the past, you can use both your 2001-02 and 2002-03 allowances (ie £6,000) if you act before the end of the tax year.

If you complete an income tax self-assessment return and needed to make a tax payment on account at the end of last month, and are due to make another this July, review your income for the year as soon as possible. If you genuinely anticipate a fall in profits, you can claim to reduce these tax payments. If you overpay, you'll have to wait to get the money back, and the Inland Revenue will not pay interest unless the refund is delayed beyond January 2004.

However, if you reduce a payment on account by more than you should, interest will be charged on the difference from the date payment was due.

The new Child Tax Credit and Working Tax Credit come into effect on 6 April 2003. Check if you are eligible to claim (you may be pleasantly surprised) and get your form in soon, as claims can only be backdated by three months.

If you have cash investments, you may benefit by using your individual savings account allowances for 2002-03. These can't be carried forward.

Also consider making full use of the current year's pension relief by 5 April 2003. And don't forget the capital gains tax annual exemption of £7,700 for 2002-03, which may be useful if you are thinking of selling an asset before the year-end.

Although we do not know precisely what the Chancellor will do in his forthcoming Budget, we will soon feel the full blast of his initiatives from previous years. From 6 April, for example, national insurance contributions (NICs) are going up.

Employees earning up to £60,000 per year face increases in NICs of 10 per cent. Those with salaries of between £60,000 and £100,000 will have to deal with NIC increases of 23 per cent, and anyone earning in excess of £100,000 per year will suffer a 39 per cent rise in NICs.

These growing costs are not softened by increases in personal allowances across the board. Instead, most people will find their personal allowance is frozen at £4,615 for the coming year.

To mitigate against the national insurance increases, consider advance payments of salary or bonuses before the year-end. There will be NI to pay but it will be at this year's lower rates, so your overall NI payment will be less than if you leave everything until the next tax year.

For a free information sheet on year-end tax planning, go to www.smith.williamson.co.uk/publications.shtml

Francesca Lagerberg is national tax director at Smith & Williamson, the professional and financial services group: 020 7612 8858.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

Have you tried new the Independent Digital Edition apps?
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

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

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Content Writer - Global Financial Services

    £25000 - £30000 per annum: Recruitment Genius: From modest beginnings the comp...

    Recruitment Genius: Web Developer - PHP

    £35000 - £40000 per annum: Recruitment Genius: From modest beginnings the comp...

    Recruitment Genius: Field Sales Consultant - Financial Services - OTE £65,000

    £15000 - £65000 per annum: Recruitment Genius: This is an exciting opportunity...

    Recruitment Genius: Loan Underwriter

    £18000 - £20000 per annum: Recruitment Genius: This is a fantastic opportunity...

    Day In a Page

    The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

    The Silk Roads that trace civilisation

    Long before the West rose to power, Asian pathways were connecting peoples and places
    House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

    The honours that shame Britain

    Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
    When it comes to street harassment, we need to talk about race

    'When it comes to street harassment, we need to talk about race'

    Why are black men living the stereotypes and why are we letting them get away with it?
    International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

    International Tap Festival comes to the UK

    Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
    War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

    Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

    Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border
    Doris Lessing: Acclaimed novelist was kept under MI5 observation for 18 years, newly released papers show

    'A subversive brothel keeper and Communist'

    Acclaimed novelist Doris Lessing was kept under MI5 observation for 18 years, newly released papers show
    Big Blue Live: BBC's Springwatch offshoot swaps back gardens for California's Monterey Bay

    BBC heads to the Californian coast

    The Big Blue Live crew is preparing for the first of three episodes on Sunday night, filming from boats, planes and an aquarium studio
    Austin Bidwell: The Victorian fraudster who shook the Bank of England with the most daring forgery the world had known

    Victorian fraudster who shook the Bank of England

    Conman Austin Bidwell. was a heartless cad who carried out the most daring forgery the world had known
    Car hacking scandal: Security designed to stop thieves hot-wiring almost every modern motor has been cracked

    Car hacking scandal

    Security designed to stop thieves hot-wiring almost every modern motor has been cracked
    10 best placemats

    Take your seat: 10 best placemats

    Protect your table and dine in style with a bold new accessory
    Ashes 2015: Alastair Cook not the only one to be caught in The Oval mindwarp

    Cook not the only one to be caught in The Oval mindwarp

    Aussie skipper Michael Clarke was lured into believing that what we witnessed at Edgbaston and Trent Bridge would continue in London, says Kevin Garside
    Can Rafael Benitez get the best out of Gareth Bale at Real Madrid?

    Can Benitez get the best out of Bale?

    Back at the club he watched as a boy, the pressure is on Benitez to find a winning blend from Real's multiple talents. As La Liga begins, Pete Jenson asks if it will be enough to stop Barcelona
    Athletics World Championships 2015: Beijing witnesses new stage in the Jessica Ennis-Hill and Katarina Johnson-Thompson heptathlon rivalry

    Beijing witnesses new stage in the Jess and Kat rivalry

    The last time the two British heptathletes competed, Ennis-Hill was on the way to Olympic gold and Johnson-Thompson was just a promising teenager. But a lot has happened in the following three years
    Jeremy Corbyn: Joining a shrewd operator desperate for power as he visits the North East

    Jeremy Corbyn interview: A shrewd operator desperate for power

    His radical anti-austerity agenda has caught the imagination of the left and politically disaffected and set a staid Labour leadership election alight
    Isis executes Palmyra antiquities chief: Defender of ancient city's past was killed for protecting its future

    Isis executes Palmyra antiquities chief

    Robert Fisk on the defender of the ancient city's past who was killed for protecting its future