Year End Tax Planning Checklist

Here is a quick checklist of things you should look at before the tax year ends on 5 April. It is not exhaustive and, of course, all financial planning should be done with proper professional advice. Ask before you act!

Income Tax

If one of a couple is a higher-rate taxpayer and the other is not, moving income from the higher rate taxpayer to the lower rate taxpayer will produce tax savings. In general, the nearer equal a couple's income, the less tax they will pay. Gifting income-producing assets to a spouse is an efficient tax-planning technique.

Student Children

With the escalating costs of going to university you may wish to consider gifting money to student children as soon as they are 18.

Capital Gains Tax

If you have stocks and shares that have yielded gains that are unrealised, consider selling shares to take account of the personal CGT limit. If you have realised gains and have some investments standing at a loss, consider selling the ones at a loss it may reduce your tax bill. You can also gift assets subject to CGT to your spouse, allowing him or her to use their own CGT exemption.

If you have losses, realising them will make the loss available to set against future gains when they become chargeable. Rules have recently been introduced to remove the advantages of ‘bed and breakfasting’ shares, so if you are intending to sell and repurchase shares to shelter your gains, take professional advice first.

Pension Premiums

With a stakeholder pension, you can contribute up to £3,600 a year even if you are a non-taxpayer.

Deferring Gains

If you have capital gains, the tax on these may be able to be deferred through the use of a Venture Capital Trust or Enterprise Investment Scheme investment.

Swapping Taxable for Tax-free Income

Consider moving assets from holdings where the income is taxable (dividends, bank interest, etc) to ones where is it not ISAs, some government stocks etc). This is more effective if you pay higher rate tax.

Inheritance Tax

Consider making use of your annual IHT-free limits to give away assets which are surplus to your needs.

Always take professional advice when deciding your tax planning or investment strategy.