End of tax year looms
Taxpayers are being reminded that they have only until Friday to prepare for the end of the tax year.
The tax year effectively ends on Friday 3 April as 5 April falls on a Sunday, and there are a number of deadlines of which people should be aware.
The time is nearing (5 April) for using up ISA investment allowances for 2008/09. The yearly allowance is £3,600 for cash ISAs and £7,200 for stock and shares ISAs. Anyone who isn’t sure what equities to invest in by 5 April can always put their money into a ‘cash park’ fund so that the allowance is protected.
Anyone who is thinking of selling profitable investments or shares should remember to use their capital gains tax allowance for 2008/09 which is up to £9,600. Above that threshold the tax charge is 18 per cent. Losses that have been made on sales of assets can be offset against future profits.
The annual inheritance tax exemption also needs to be used by 5 April. The allowance is for gifts up to £3,000 before inheritance tax is triggered. Any unused allowance for the previous tax year (2007/08) can also be taken advantage of, although not until the exemption for 2008/09 is used.
As from 6 April, topping up missed National Insurance contributions will increase in cost by 49 per cent. The cost of adding an extra year to your state pension pot rises from £421.20 to £627.60.
There are also tax reliefs to be claimed on personal and stakeholder pension contributions.
For married couples, the year end marks the point at which they can reduce their income tax charge by transferring savings into the name of the spouse who earns less, so long as that person is either a non-taxpayer or is in a lower tax band. The money is then charged at their tax rate. However, the allowance only applies when one or both of the married couple were born before 5 April 1935.
Bear in mind too that 5 April is the last day for contracting back into the State Second Pension scheme for 2008/09.
If you would like any advice on how best to make use of the year-end allowances, don’t hesitate to contact us.