Page 60 - Phonebox Magazine March 2011

Once again we are approaching the end of a tax year and time is running short to make the most of the various tax allowances and reliefs that are available.
Each of us has an annual Capital Gains Tax (CGT) allowance of £10,100 which allows tax free gains up to this level. This is a 'use it or lose it' allowance so action before 6th April is vital. This has added importance for some this year as the CGT rate was increased from 18% to 28% for higher and additional rate taxpayers during the year. In addition, it should be remembered that losses on investments can be crystallised to offset against gains that have been made elsewhere.
Turning to Inheritance Tax, the £3,000 per person annual allowance means that gifts of up to this amount can be made and are immediately outside of your estate. Furthermore, if no gifts were made last year, the allowance can be carried forward meaning that a total of £6,000 could be gifted this year or £12,000 for a couple.
One of the most popular forms of tax planning at this time of year is using up the Individual Savings Account (ISA)
allowance of £10,200. This can either all be invested in a Stocks and Shares ISA or up to half can be invested in a Cash ISA (for tax free interest on your savings). Remember, you are also now able to switch funds from a Cash ISA into a Stocks and Shares ISA.
However, the most common form of investment for tax purposes in March is traditionally that of pensions. Tax relief at your highest rate is still available, making this option particularly attractive for higher and additional rate taxpayers. It should also be remembered that everyone is entitled to tax relief which means that for those who are non tax payers pension contributions still benefit from 20% tax relief. Furthermore, investing in the name of a non working spouse also helps to even out a couples retirement income, thereby adding further tax efficiency to a couples finances in the future.
If you would like to discuss tax planning opportunities that may be available to you, then please call us for a free initial meeting. See our advert below.
60 Phonebox Magazine
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Finance Matters
Have you made the most of your Tax breaks?