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
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Claims Administrator

    £16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

    Recruitment Genius: Senior SEO Executive

    £24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

    Recruitment Genius: Online Customer Service Administrator

    £16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...

    Recruitment Genius: Digital Marketing Executive

    £18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...

    Day In a Page

    Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

    Fishing is on Nigel Farage's mind

    Ukip leader casts a line to the disaffected
    Who is bombing whom in the Middle East? It's amazing they don't all hit each other

    Who is bombing whom in the Middle East?

    Robert Fisk untangles the countries and factions
    China's influence on fashion: At the top of the game both creatively and commercially

    China's influence on fashion

    At the top of the game both creatively and commercially
    Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

    The man known as GOD has a reputation for getting the job done

    Lord O'Donnell's three principles of rule
    Rainbow shades: It's all bright on the night

    Rainbow shades

    It's all bright on the night
    'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

    Bread from heaven

    Dutch survivors thank RAF for World War II drop that saved millions
    Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

    How 'the Axe' helped Labour

    UK will be 'run for the wealthy and powerful' if Tories retain power
    Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

    The price to be paid for challenging the rule of extremists

    A revolution now 'consuming its own children'
    Welcome to the world of Megagames

    Welcome to the world of Megagames

    300 players take part in Watch the Skies! board game in London
    'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

    Charlotte Gainsbourg on 'Nymphomaniac'

    Starring in one of the most explicit films ever
    Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

    Robert Fisk in Abu Dhabi

    The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
    Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

    Vince Cable exclusive interview

    Charging fees for employment tribunals was 'a very bad move'
    Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

    Iwan Rheon is returning to his Welsh roots

    Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
    Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

    It's time for my close-up

    Meet the man who films great whites for a living
    Increasing numbers of homeless people in America keep their mobile phones on the streets

    Homeless people keep mobile phones

    A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before