Personal Tax – planning for 5th April

With four months to go before the end of the tax year there is plenty of time to consider all tax planning opportunities.

Here are some ideas:

• Individual Savings Account (ISA) – for 2011/12 this is £10,680 for a stocks and shares ISA or £5,340 for a cash ISA.

• Capital Gains Exemption - where possible, realise capital gains to use your annual exemption allowance of £10,600 for 2011/12.

• Pension contributions – the rules on maximum relief available changed on 6 April 2011 and, in addition to being able to pay up to £50,000 gross this year, you may also have unused relief available from earlier years that you can bring forward and use this year as well. If you are a 40% taxpayer, the total tax relief available could therefore be significant and even more so if you have earned enough to lose your personal allowance or are a 50% taxpayer.

• Enterprise Investment Schemes – receive income tax relief at 30% on investments up to £500,000.

• Venture Capital Trusts – receive income tax relief at 30% on investments up to £200,000.

• Life Assurance based investments - allow an annual 5% withdrawal free of tax for 20 years (the surrender proceeds are, typically, then taxable in full as income).

• Personal Allowances – these taper away once your total income exceeds £100,000 and disappear altogether above an income level of £114,950 – income falling within this band is being taxed at 60% so consider making Gift Aid donations and/or Pension Contributions before 6 April 2011 to reduce your income below £100,000 again and effectively obtain 60% tax relief on the payments. Alternatively, if possible, consider deferring some income until after 5 April 2012.