The tax year end may see a long way off, however don’t leave your planning until the last minute.
Use your annual ISA allowance
The most obvious tax planning to be done before the end of the tax year is to make sure you have used this years ISA allowance. The annual allowance for a stocks & shares ISA for tax year 2011/2012 is £10,680. In some cases it’s possible to add the charges for investing, so that the full allowance can be invested. And don’t forget married couples have an allowance each. Remember that you have to use the allowance or lose it. There is no going back after the 5th April.
If stocks & shares ISA’s are not for you, you can still invest into a cash ISA. The annual allowance is half of the full allowance allowing you to invest a total of £5,340 in the current tax year 2011/2012.
However, it..’s not all about ISA’s
Pension retirement planning ideas
Legislation changed last April and has given rise to a few opportunities for you to add value to your pension fund. Here are a few ideas to consider.
- Increase your contributions to adjust your income below tax and personal allowance thresholds.
- You can also make pension contributions for members of your family even if they don’t pay income tax. An annual contribution of £3,600 gross can be invested, which is £2,880 net plus tax relief of £720 from HMRC.
- Using carry forward of unused annual allowance and increase the total amount invested into your pension.
A few other end of year tax planning ideas.
If you are planning on doing some Inheritance Tax planning, use your annual gift allowance of £3,000. And if you did not use last years allowance you can use that as well, giving you a total of £6,000. There is also the small gift allowance of £250, which you can gift away intop of the £3,000.
We each have an annual Capital Gains Tax allowance of £10,600. If you have gains up to or more than this you can make disposals to take advantage of the allowance. Again it’s a case if use it or lose it. You make not wish to sell your share holding on a permanent basis, but unfortunately ‘bed & breakfasting’ is no longer permissible. However, this can be circumvented by ‘ bed & spousing’ instead. You sell the stock and your partner buys it back the following day, thereby ensuring you keep hold of your top performing investment.
Before embarking on any tax planning and investing it is recommended that you seek professional advice.
