Friday, 30 March 2012

Last minute check list before 5 April


A quick reminder of things you should do this tax year, ie before Thursday 5 April:
  1. Large pension pots should apply for fixed protection before 6th April, to get a personal lifetime allowance (total pension fund) of £1.8 million instead of £1.5 million. Done?
  2. Unused pension contributions will disappear from 6th April so make use of your 2008/09 allowance (3 year carry forward rule). Especially relevant for 50% taxpayers. Done?
  3. If your taxable income for the 2011/12 tax year is over £100,000 you could make a pension contribution before the tax year end to bring your effective taxable income down to £100,000 and save paying the marginal 60% rate of tax that applies to income between £100,000 and £116,210. Every £2 earned over £100,000 means you lose £1 of your personal allowance. Done?
  4. Utilise the 2011/12 ISA allowance of £10,680 for your self and spouse and Junior ISA allowance of £3,600., wherever possible. Done?
  5. Qualifying Life policies, which can include Maximum Investment Plans and whole of life policies with investment content, are now restricted to maximum contributions of £3,600 pa. Anyone who already has such a plan and is contributing more than this should not adjust the premiums in any way, which could jeopardise the tax concessions built in.
  6. A VCT contribution made before 6 April will reduce taxable income for the 2011/12 tax year by 30% of the investment made.
Things to think about as we go into the new tax year:
  • Before April 2013 50% taxpayers should be maximising pension contributions to get the 50% relief and could also take advantage of the 22% tax gap between CGT and income tax to increase capital return from investments.  
  • Genuine VCTs and EISs will be more viable from April 2012 - the investment limits are being extended on qualifying companies - so they can invest in larger businesses and potentially reduce the levels of risk to investors. Significant capital gains made in the last 3 years can be deferred by investing the value of the gain into an EIS, if the current years CGT exemption has already been used.

JOHN FLETCHER, FINANCIAL PLANNER

For further information or to speak to Nick Burt, please call the Brewin Dolphin Press Office on 020 3201 3026

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