Don't forget that the end of the tax year is on April 5 - just five weeks away.
The Chancellor will deliver his latest Budget report in mid-March, which is expected to be very much along 'steady as we go' lines. Early indications from 11 Downing Street are that we should not expect a 'giveaway' or tax-cutting Budget, despite early forecasts that the Conservatives might slump into third place at the European elections in May.
We would therefore advise you to take advantage of the current tax breaks and allowances that are available at the moment, and to ensure that you use these allowances before April 5. (Clients should also note that April 5 is a Saturday this year, so for practical purposes the end of the tax year will be on Friday April 4.) We hope that the ideas and suggestions below will help you make the most of your allowances. If you have any queries please don't hesitate to get in touch.
Individual Savings Accounts
First and foremost make full use of your Individual Savings Account (ISA) allowance. The limit for 2013/14 is £11,520 but if you don't use it by April 5 it is lost. Husbands and wives both have an allowance, and from April 6 the limit will rise to £11,880. If you are saving for children don't forget to make use of Junior ISAs, where the limit for this tax year is £3,720.
Capital Gains Tax
Your annual Capital Gains Tax allowance is often overlooked. The amount for the current year is £10,900 (rising to £11,000 in 2014/15) and again both husband and wife have the allowance - so there is scope for transferring assets between you in order to reduce your tax bill.
Taxation of Income
Income over £150,000 is taxed at 45% - however, because you lose the personal allowance this means that income between £100,001 and £118,800 is effectively taxed at an enormous top rate of 60%. If your income is near these limits consider reducing your taxable income below £100,000 or £150,000. You might consider pension contributions or payments to charities, both of which will reduce your tax bill.
It is always important to look at your pension contributions and pension planning, especially as the tax year end approaches. The message from the Government is more and more clear - you are going to be responsible for your own income in retirement as the state simply cannot afford to fund the ever-increasing number of older people.
Note that from April 6 2014 the Pension Lifetime Allowance is being cut from £1.5m to £1.25m. This reduction has potentially serious implications for many business owners and high earners and if you feel that you may be affected you should get in touch with us.
If you have a second home, and you live in both, you should consider carefully which one you nominate as your main residence. Choose the one you are likely to sell first and the one which is likely to have the biggest capital gain. If you have moved home and have yet to sell your previous home then take care: from April 6 2014 you have just 18 months to sell your former home before you are caught for tax - previously it was 36 months.
Don't forget that if you are saving for your children's future (house deposit, further education etc.) then you should make use of the Junior ISA allowances detailed above. You can also make pension contributions for your children (even though they don't work) and remember that your children also have the normal Capital Gains Tax allowance.
Think about a company car with lower emissions: this year the rate of tax for the benefit in kind increases by 1%.
We will always do our best to cut your tax bill but we'll never eliminate it altogether and sadly we're also powerless to save our clients from the other eventuality that is always with us. If you believe that your estate might be liable for Inheritance Tax (the current limit is £325,000, which is frozen until 2017/18) then it makes sense to do something about it. Inheritance tax is an area where a little planning can go a long way. First of all you can make annual gifts of £3,000 free of any tax liability and also use any unused allowance from the previous year. You can also make gifts from regular income, providing they don't reduce your 'normal' standard of living. It's also possible to make IHT-free investments, although that is probably outside the scope of these relatively basic notes.
Hopefully the above points will help you plan for the end of the tax year and make the most of the allowances that are available. If you have any questions on any of these points or suggestions then - as always - we are only a phone call or an email away.