Act now for tax breaks - Business - News - The Independent

Act now for tax breaks

There are eight days to the end of the financial year and the Easter weekend takes up four of them, leaving just four working days for your year-end tax planning.

It is now or never to start checking what needs to be done. The following list covers the main points you should be watching out for:

Plan for old age. Tax relief on pension payments is generous, so use it. Employees in a company pension scheme can put up to 15 per cent of net relevant earnings into their pension or as additional voluntary contributions (AVCs). Contributions based on 1998/99 earnings must be paid this tax year. The self-employed and employees who are not in company pension schemes may make contributions into personal pension plans. Contributions paid this year will reduce this year's tax liability and next year's payments on account. Unused tax relief for pension payments can be brought forward from the last six years.

Be generous. If you have assets that will create an inheritance tax (IHT) bill when you die, it makes sense to give some away. You can give small gifts up to the value of pounds 250 to as many people as you wish. Larger gifts worth up to pounds 3,000 a year are also exempt from IHT. The pounds 3,000 exemption can be carried forward for one year, so there's no rush to pay out before 5 April. Both husband and wife can make these gifts.

Use those gains. Anyone who has made large capital gains, from rising share prices for instance, should consider selling enough assets to use up their annual capital gains tax exemption of pounds 6,800 per person this year. A married couple can make tax-free gains of pounds 13,600.

The allowance is lost if not used before 6 April. Make sure you do not buy back the same shares within 30 days or you will fall foul of the rules against "bed and breakfasting".

Save for a rainy day. Tessas (tax-exempt special savings accounts) will be replaced by individual savings accounts (ISAs) next year, but Tessas can be opened with cash deposits of up to pounds 3,000 this year (see page 14). You can open a Tessa account with a smaller sum before 6 April and still save up to pounds 9,000 tax free over the next five years.

Something ventured. Wealthier investors prepared to take risks should look at venture capital trusts (VCTs) and enterprise investment schemes (EIS).

Both offer big tax breaks. There is income tax relief at 20 per cent on EIS investments up to pounds 150,000 and on VCTs there's tax relief to pounds 100,000, plus CGT deferral on both.

An even more generous 100 per cent income tax relief is available on Enterprise Zone buildings or investment trusts. Payment is due by 5 April.

Drive down your tax rate. The more business miles you drive in your company car the lower the tax rate, so if you are just under one of the thresholds - 2,500 or 18,000 miles - hit the road now.

Give to charity. If you are a top-rate taxpayer giving more than pounds 250 to charity (going down to pounds 100 next tax year) or making covenants, then you will benefit from 17 per cent tax relief.

Trust income. Trustees of discretionary and accumulation and maintenance trusts, which are taxed at 34 per cent, may want to distribute some income from the trust to basic-rate or non-taxpaying beneficiaries. Take care in case the distribution increases the beneficiaries' tax rate.

n Frank Collingwood is a chartered tax adviser and president of the Association of Taxation Technicians.

Suggested Topics
John Travolta is a qualified airline captain and employed the pilot with his company, Alto
people'That was the lowest I’d ever felt'
Life and Style
healthIt isn’t greasy. It doesn’t smell. And moreover, it costs nothing
Arts and Entertainment
Emma Thompson and Bryn Terfel are bringing Sweeney Todd: The Demon Barber of Fleet Street to the London Coliseum

Returning to the stage after 20 years makes actress feel 'nauseous'

peopleThe Times of India said actress should treat it as a 'compliment'

Commuter travels 320 metres, 75 steps, two ticket barriers and a labyrinth of roads to get to work
Home body: Badger stays safe indoors
lifeShould we feel guilty about keeping cats inside?
The programme sees four specialists creating what they believe are three perfect couples, based on scientific matchmaking. The couples will not meet until they walk down the aisle together
tvUK edition of wedding show forced to recast after wave of drop-outs
Arts and Entertainment
US pop diva Jennifer Lopez sang “Happy Birthday” to Gurbanguly Berdimuhamedow, president of Turkmenistan
musicCorporate gigs become key source of musicians' income
Arts and Entertainment
You've been framed: Henri Matisse's colourful cut-outs at Tate Modern
artWhat makes a smash-hit art show
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
While many films were released, few managed to match the success of James Bond blockbuster 'Skyfall'
filmsDaniel Craig believed to be donning skis as 007 for first time
The Guildhall School of Music and Drama is to offer a BA degree in Performance and Creative Enterprise

Top conservatoire offers ‘groundbreaking’ arts degree

Mikel Arteta pictured during Borussia Dortmund vs Arsenal
champions league
Yes supporters gather outside the Usher Hall, which is hosting a Night for Scotland in Edinburgh
voicesBen Judah: Is there a third option for England and Scotland that keeps everyone happy?
Arts and Entertainment
Pulp-fiction lover: Jarvis Cocker
booksJarvis Cocker on Richard Brautigan
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.

iJobs Job Widget
iJobs Money & Business

Recruitment Consultant - Soho - IT, Pharma, Public Sector

£20000 - £25000 per annum + OTE £35,000 first year: SThree: The SThree group i...

Sales Executive

£20 - 24k (Uncapped Commission - £35k Year 1 OTE): Guru Careers: We are seekin...

Payroll & Accounts Assistant

£20 - 24k + Benefits: Guru Careers: This is a great opportunity for an enthusi...

SQL Developer - Watford/NW London - £280 - £320 p/d - 6 months

£280 - £320 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week