Last chance to find a tax shelter: Pension contributions are one way that you can still beat the Inland Revenue's deadline. Christine Stopp reports

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The Independent Online
TOMORROW week the door shuts on a number of ways to cut your tax bill.

It may already be too late to use some of these allowances and elections, but if you move fast, you can still shelter large sums from the taxman.

Pensions is probably the biggest area for last-minute tax savings, as contributions received by your company before 5 April are allowable, and you get tax relief at your highest rate on the full amount paid.

Someone aged 45 may contribute up to 20 per cent of relevant annual income to a personal pension plan, or 17.5 per cent to an old-style retirement annuity contract.

Scottish Provident has produced a useful guide to pensions planning, explaining how the carry-forward and carry-back rules work. Carry forward means 'mopping up' unused relief from previous years if you have cash to spare after paying your full contribution for this year. Until 5 April, you can carry forward from 1986-87 onward.

Carry back means treating this year's contribution as if it were last year's, leaving this year's allowance to be paid in future years. Combining carry back and carry forward, you can use up relief dating back to 1985-86. After the end of the tax year, 1985-86 drops out of the picture. Contributions and tax forms have to be in by 5 April, so those interested should take advice without delay.

John Hay, product marketing manager at Scottish Provident, warns of a couple of wrinkles. First, you cannot contribute more than your current earnings, even if you have back years of tax relief that would allow you to do so - so do not try to invest a pounds 20,000 inheritance if you are only earning pounds 15,000.

Secondly, personal pension plans carry an earnings cap on contributions, whatever your actual earnings, while the older retirement annuity plans do not. If you put any cash into a personal pension, your entire contributions come under the earnings cap (frozen at pounds 75,000 in the Budget). High earners with retirement annuity plans should think carefully before starting a personal pension.

For the redundant executive whose wife is in a high-flying job - and therefore a higher-rate taxpayer - an election to transfer the whole married couple's allowance to her might be a wise move before the year end. If he is reluctant, she can seize half of it anyway. The election is made on Inland Revenue Form 18. The maximum amount that may be saved is pounds 258, or 15 per cent of the married couple's allowance. If circumstances are likely to change, our ex-executive should think carefully. An election before 6 April covers the next tax year (1993-94) and cannot be undone.

Other year-end tax points: - Additional voluntary contributions. Employees can use these to boost future benefits, with maximum contributions of 15 per cent of salary, including existing payments into the employer's scheme. This year's AVC allowance, unlike the personal pension allowance, is lost irrevocably after 5 April.

Capital Gains Tax. Sell investments now to bring gains within the year's pounds 5,800 exempt limit, or 'bed and breakfast' them by selling and buying back overnight.

You may already be too late to transfer assets into a personal equity plan following a B & B deal: Sharelink stopped accepting such transactions on Friday, although it will take a straight B & B until 3pm on 31 March, while Premier Unit Trust Brokers in Bristol need written instructions and certificates by tomorrow. Shares can be B & B'd right up to the afternoon of 5 April with some brokers - Midland and Fidelity, for example - although you may need to have completed a client application in advance, which will rule out newcomers.

Inheritance tax. Use exempt gift limits which apply every tax year (although unused portions of the gift exemption may be carried forward for one year only).

PEPs. Make use of your annual allowance - up to pounds 6,000 for a general PEP plus up to pounds 3,000 for a single company PEP. Deadlines on PEPs will vary.

Noble Lowndes sees PEPs as more attractive to higher-rate taxpayers since the Budget changes in tax on dividends. With the reduction in basic-rate tax on dividends, PEP benefits may also be seen as under attack. An added reason, perhaps, for getting in now. Most PEP managers stop taking PEP applications tomorrow, as they offer a cooling-off period.

Company cars. A higher-rate taxpayer with a company car could save up to pounds 554 by driving over the 2,500-mile lower limit on business use before 5 April.

Business Expansion Schemes. These end on 31 December 1993. You can invest up to pounds 40,000 for this year and next, although the popular loan-back schemes were ended in the Budget. These schemes are really only suitable for higher- rate taxpayers.

Private companies that pay out profits as dividends should consider bringing the dividend payment forward ahead of 6 April. After that, the value of tax credits drops from 25 per cent to 20 per cent. This will not affect basic-rate taxpayers, whose liability for tax on the dividends will be cut to 20 per cent, but higher-rate payers will end up paying more tax.

Carry-back and carry-forward guide free from local offices of Scottish Provident, or tel 031-556 9181. For Noble Lowndes, tel 081-686 2466.