Tax Planning
At the end of the tax year it is important to consider reducing your tax burden. Now is the time to use up all those allowances and arrange your affairs so that you minimise the tax due. Companies as well as individuals can benefit from some end of tax year planning.
Charles Abbott, head of our Wills, Trusts and Probate department says:
“One area to consider is whether you have contributed all that you could to your pension. Some of the biggest changes in pensions law for years are on the horizon. The changes are known as “A Day”. For those at the higher end of the income scale a pension cap is going to be imposed which means any money in a pension over the sum initially set at where your pension pot is £1.5m, but which will be linked to inflation and raised each year, rather than linked to earnings, will be punitively taxed, effectively confiscated. What you should be doing now if you have a large pension pot is having it valued and the value declared to the Inland Revenue as existing rights are protected. Also for 2006/2007 you will be allowed to put 100% of your earnings into a pension up to a maximum contribution limit of £215,000. Now is a good time to take some tax advice.
Another area to consider is the new rules on pre-owned assets. A lot of existing legitimate inheritance tax avoidance schemes could be threatened by changes to the law in the Finance Act - the rules on "pre-owned assets". If someone gains some "benefit" after 6th April 2005 from an asset previously given away such as to a member of the family then a new annual income tax charge applies. There were some earlier rules known as gifts made "with a reservation of benefit" but the Inland Revenue thought they could easily be avoided. However under the new rules there are some exemptions. If an annual "benefit" is less than £5,000 it is not taxable. Anyone who has given away significant assets including just cash since 17th March 1986 should consider their position before April. There are various options for action which we can discuss with you.”
Anyone needing advice on this or any related area should contact Charles Abbott on 0117 9290451 or e-mail cabbott@metcalfes.co.uk
This press release summarises the law on issues which we believe may be of interest to your business. It is not a comprehensive review of the subjects and accordingly is published without responsibility for loss occasioned to any person(s) acting or refraining from action as a result of information published