Pre-Year End Tax Planning

The completion of your 2005/06 tax return and the payment of any tax due by 31 January 2007 may now be fading from your memory, but you should not consider that to be the end of the matter for another 12 months!
Ultimately, tax planning should be a continuous process focusing on an individual's needs and circumstances. As proactive tax advisers, Styles & Co ensures that tax planning is not just an annual review and where possible, should take into account an individual's family as a whole, looking at the requirements of family members, and the resources available, including family trusts and companies.

The period leading up to the end of the tax year (5 April) is a key time for doing those last minute tax planning chores you may have been putting off. You may be surprised at how much tax you could save by devoting a little time and effort to this matter.

With this in mind, what tax planning issues should you be thinking about at this time? A large part of the exercise will be to make sure you are fully utilising your personal reliefs and allowances. For example:

? If you have not utilised your CGT annual exemption (currently £8,800) then you could consider realising capital gains up to this amount so that they are in effect tax-free. Equally, do you have any unutilised capital losses or other asset that you know would realise a capital loss (typically investments in stocks and shares) so that it can offset the gain.

? Pension planning should also be considered and whether it is appropriate to make any further pension contributions for you or your family members. Remember that pension contributions qualify for tax relief and payments up to £3,600 (gross) can be relieved irrespective of the level of earnings.

? Income received within an individual's personal allowance is tax-free. It would not be unusual for the spouse of a self-employed person to assist in the running of the business and receive a salary that may be within the personal allowance.

? Individual Savings Accounts ("ISA's") can be a tax efficient way to invest savings. There are limits on the amounts an individual can invest in an ISA in each tax year, so you should consider whether or not you have fully utilised your annual limit.

? For inheritance tax purposes, you also have an annual exemption for gifts of £3,000, as well as an exemption for small gifts of up to £250.

The completion of your 2005/06 tax return and the payment of any tax due by 31 January 2007 may now be fading from your memory, but you should not consider that to be the end of the matter for another 12 months!