Is the end of the tax year the best time to undertake tax planning?
Ideally, tax planning is something you should consider throughout the year, but the end of the tax year means that if you do not use certain allowances by 5 April 2002, then they will be lost for the 2001-02 tax year.
The strategy should be (subject to, for example, investment considerations) to maximise the use of available allowances by 5 April 2002.
So what should I do?
For income tax, you should look to use up your investment allowances into ISAs. You can invest up to £7,000 each in a maxi-ISA in any one tax year. Any income and gains made within the ISA will be tax-free. However, remember that if you wish to invest only in a cash ISA, the investment limit is £3,000.
Make sure that you maximise all available personal allowances.
For example, if your spouse has little or no taxable income, ensure that your spouse owns any income producing assets such as stocks and shares.
Ideally, this should be done at the start of the tax year rather than at the end so as to shelter as much investment income as possible.
For capital gains tax, you have an annual capital gains tax exemption of £7,500. For a 40% taxpayer, the potential saving is £3,000. Again, remember that your spouse or partner also has an annual capital gains tax exemption, but watch transfers to a partner as they may trigger capital gains tax.
For inheritance tax, you have an annual exemption of £3,000 a year. Further, if you did not use your allowance in the previous year, you may claim it in the current year if you have used up the current year’s allowance.
Taxman lines up early exit from doomed Concentrix tax credits deal, as HMRC faces intense scrutiny from MPs
Crowe Clark Whitehill , the top 20 accountancy firm, has announced the promotion of Chris Mould to partner
The latest opinions from Accountancy Age on Making Tax Digital, and outline plans to evolve the UK's corporate governance regime
Five million taxpayers are ow using digital personal tax accounts (PTA) as part of the making tax digital strategy, HMRC said