Spring Tax Planning

Budget or no Budget, the next big tax planning opportunity is here, but you need to act before 6 April.It seems harder than usual this year to predict what ‘surprises’ will be announced in the Budget on 23 March; however, given the commitment to transparency and consultation, you could argue that we shouldn’t be in for any bolts from the blue. Simplification is still one of the Coalition’s themes, but when it comes to tax, moves towards simplification often only serve to complicate matters. The Chancellor’s push for the UK to be competitive internationally is at odds with the Budget deficit, but should make a move to bringCapital Gains Tax more closely in line withincome tax unlikely.Regardless of what new measures are announced in the Budget, individuals will always benefit from reviewing their financial and tax position before the start of the new tax year. There is now a short window of opportunity before 6 April to make sure you have made and will continue to make, full use of the allowances and reliefs available.This may include inter-spousal gifting and triggering income and gains to make full use of the lower tax bands and Capital Gains Tax annual exemption. It’s also time to review tax reliefs, such as charitable gifting, pension and ISA contributions, to ensure the maximum relief is claimed without breaching the tax limits.Of course, a number of measures have already been announced, notably the generous tax reliefs available for Enterprise Zones (EZs) will cease at the end of this tax year, so there is a one-off opportunity to consider these investments before 6 April.Other changes include the annual pension contribution qualifying for a higher rate relief being limited to £50,000 for higher-earning individuals from 6 April 2011, combined with the lifetime allowance being reduced from £1.8m to £1.5m on 6 April 2012. This, together with the increase in National Insurance contributions, will mean that employers and employees need to start considering different forms of remuneration and life-time saving. For employers, salary sacrifice arrangements are high on the agenda, and individuals are looking at a wider range oftax efficient investments to supplement their pension savings, including Venture Capital Trusts, as well as EZs and ISAs mentioned above.Ultimately, Year End planning may not be front page news like the Budget; however, with the right advice, it is a tried and tested way of reducing your annual tax bill.