Maximise your Tax Free Allowances before 5 April 2012

As you will be aware, the tax year ends on 5 April so prompt action is required if you wish to take full advantage of the following tax-free allowances:

Capital Gains Tax
The annual exemption is £10,600 per individual. If you have not used this year’s exemption and are expecting to realise a gain shortly, try to complete the transaction before 5 April 2012. If you have already used this year’s exemption, consider deferring the transaction until the new tax year.

If you have quoted shares that are showing large gains consider selling sufficient pre 5 April and buying them back in the new tax year. While you must leave at least 30 days between these transactions we do have some alternatives that may help. Please contact us for further advice if you are interested in doing this.

Inheritance Tax
The annual gift exemption is £3000 per individual. If you did not use the 2010/2011 exemption, you can carry it forward and give away £6000 this year. In addition, each individual can make any number of small gifts of up to £250 per person. If you are thinking of gifting more please contact us as soon as possible to ensure the gift is as tax efficient as possible.

Individual Savings Accounts
The annual ISA exemption is £10,680 (cash limit £5,340) per individual.

Pension planning
Higher rate taxpayers thinking of making additional contributions to their personal pensions should time these carefully to obtain maximum tax relief in the earliest tax year.

If you do not currently have an Independent Financial Adviser to assist with pension or investment advice please contact us.

Annual Investment Allowance (AIA)
If you are planning to make any major purchase of assets (excluding cars) for your business to a value in excess of £25,000 you should time the purchase to ensure you receive maximum tax relief. Currently the limit for the AIA is set at £100,000 but after the end of this tax year this drops to £25,000. Please contact us for advice.

Dividends
You should ensure that any dividends paid by your company are timed correctly to ensure that you make maximum use of your basic rate tax band in the 2011/2012 tax year and, if possible, avoid paying any personal income tax at the higher 40% or 50% tax rates.