Tax Year End Planning

We recommend that you consider the following planning issues prior to 5 April:

• Pension contributions for the tax year ending 5 April 2009 must be made prior to 5 April. For those who had a particularly good year, an amount of up to £600,000 can be paid by changing pension input periods, provided this does not exceed 100% of your earnings, benefiting from a possible £240,000 of "tax relief". Lesser amounts should also be considered!
• Any application to provide Primary or Enhanced Protection against the Lifetime Allowance must be made before 5th April 2009, if you have not already done so.
• ISAs remain highly tax-efficient and £7,200 the annual allowance should be used where possible, perhaps by redirecting existing investments.
• The current market downturn provides an opportunity to review existing investment strategies to ensure that these match attitude to risk and financial objectives. It is possible to phase any new lump sum contributions into the market rather than contributing fully at this stage. This applies equally to Pensions and ISAs.
• Capital Gains Tax has reduced to 18% and even down to 10% where Entrepreneurs Relief can be claimed. Now may be the time to realise assets or crystallise gains. The annual CGT exemption for the tax year ending 5 April 2009 is £9,600 per individual. Transfers between spouses are exempt
• The decline in property and investment assets can provide an opportunity to pass on assets to the next generation or into trust. A full review of your current Inheritance Tax (IHT) Liability is the essential starting point.
• Each individual may make an annual capital payment of £3,000 which is exempt from IHT - use it or lose it.
• Where the IHT Liability has reduced (as a result of reduced values and the transferable nil rate band) existing Life Assurance plans should be reviewed to ensure that you are not overpaying.

Please let us know if you would like to discuss any of these opportunities further.