Start with your tax allowances - are you missing out?

Personal allowance.
Everyone is entitled to a basic personal allowance, which is the amount of income you can receive before you start paying income tax. Your personal allowance is not transferable, however, couples can hold income-producing savings or investments in the name of a non-earning partner. This allowance is available each tax year, which runs from April 6 to April 5.

Age allowance.
If you are over 65, you are entitled to an increased personal allowance called age allowance. You will only get the full age allowance if your income is below a set amount (£18,900 in 2004/05). Once it goes over that limit, the age allowance gradully slides away until you are back to the basic personal allowance.

Married couple's allowance
If you are a married couple and at least one of you was 65 on or before 5 April 2000, you are entitled to the married couple's allowance. This can slide away like the age allowance once age allowance has slid to the basic personal allowance, but not below the minimum amount £2,210 in 2004/05).

Levels, and bases of, and reliefs from taxation are subject to change.

Pension Allowance
Have you funded your pesnion to the maximum level permitted? You receive full tax relief at your highest rate(s) on contributions made into a personal/stakeholder pension scheme. Your maximum allowable contributions are based on an age-related percentage of your earnings (capped at £102,000 for tax yer 2004/05).

Inheritance Tax (IHT)
The key issues are to review your estate planning strategy and your Will. This may include considering making lifetime gifts to individuals or trusts (figts to spouses are normally exempt).


Tax-friendly investments

ISA allowance
You can put up to £7,000 (2004/05) into an Individual Savings Account to earn tax-efficient income and gains. Have you used up your allowance?

Personal Equity Plans (PEPs)
You are now permitted to redirect your money into a far wider range of funds, including overseas unit trusts which concentrate on US, Far Eastern, emerging markets or global shares. Also, if you hold a single-company PEP, you can now transfer the assets in the plan to a collective investment instead.

Life insurance bonds
These include with-profts bonds and unit-linked investment bonds. You can withdraw 5 per cent a year of your original capital for 20 years with no immediate income tax liability.

Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) Investment in an EIS company, which must be unquoted, and a VCT (whose assets are largely shares in unquoted companies) allow sizeable income tax relief.

Offshore roll-up funds.
These may be useful if you are planning to move overseas before you cash them in, or if you are expecting a drop in your income, perhaps on retirement. They roll up income and gains within the fund, and there is no tax to pay until you sell or make a gift.


Pensions

Pension arrangements
Check that your pension arrangements are adequate, especially if you are self-employed or not in a company scheme

Annual capital gains tax exemption
Everyone gets an annual capital gains tax exemption, set at £8,200 for 2004/05. You can make profit sup to this sum each year without paying any tax - have you utilised this?

Self-Invested Personal Pension (SIPP)
SIPPs give savers, who are self-employed or employees who are not members of an employer's occupational pension scheme, the opportunity of incorporating funds managed by different investment managers within one pension portfolio. This diversity can be particularly attractive if you have a large fund and are considering using Pension Fund Withdrawal products after retirement.

Small Self-Administered Pension Scheme (SSAS)
A SSAS is an occupational pension scheme that is extremely popular with the directors of director-controlled companies as it permits scheme investments linked to the employer. They are occupational schemes, but escape many of the investment restrictions of more conventional arrangements. In particular, a high degree of self-investment is permitted.

Take a bigger slice of the wealth cake. Beat the 5 April 2005 deadline; e-mail or contact us to see how we can help you take advantage of what is rightfully yours!