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End of a tax year. Pearson May News Update - Saturday 6 March
End of a tax year
Yet again, we are nearing the end of a tax year and it only seems like yesterday when we were in the same situation last year – a sign of getting older I suppose…
There are all the normal issues which need to be considered to plan our tax affairs, which might include the following for you:
Has the maximum been paid into your ISA this year, including for those aged over 50 the additional sum which could be paid in after 5 October 2009?
If you have been fortunate enough to enjoy any realised capital gains during the current tax year, which a number of people have with the significant recovery in the stock market from March, do you have other assets which show losses which you should consider selling before 5 April 2010 to crystallise the loss to offset against the gain?
If you are crystallising losses do not forget that, under the “bed and breakfasting” provisions, any asset which you sell cannot be repurchased for 30 days, although there are some planning opportunities which might be available.
Another aspect of Capital Gains Tax planning, if you have assets such as holdings of stocks and shares currently showing gains, is to use the 2009/10 Capital Gains Tax annual exemption of £10,100. Shares showing gains have to actually be sold to be able to offset this exemption against the gains and similar comments apply about the repurchasing of the same shares within 30 days, if this is a holding which you would wish to repurchase for the longer term.
If you are a higher rate taxpayer, do you wish to top up your pension policies with a single premium being paid before 5 April to be offset against your 2009/10 income?
If, in the tax year 2010/11 your total taxable income may exceed £100,000, you may obtain higher tax relief on a pension premium if you pay it after 6 April 2010 to be set against the later year’s income.
Have you made use of the £3,000 annual gifts exemption for Inheritance Tax purposes for the year ended 5 April 2010? Do not forget that if you did not fully utilise the £3,000 exemption for the tax year 2008/09 that can also be used to enhance a potentially Inheritance Tax free gift made in the current tax year.
For many individuals who are company directors primarily paying themselves dividends, you need to ensure that you have sufficient salary in aggregate for the year ended 5 April 2010 to obtain a National Insurance credit for state pension purposes. This will require for 2009/10 an aggregate salary of at least £4,940 for the year.
On other matters have you updated your Will recently? Are there Inheritance Tax planning issues which need to be considered? Do not put off these tasks, you might be tempting providence!
The above is for general guidance only and no action should be taken without obtaining specific advice.
Any reader who would like a free copy of the Pearson May Financial Perspectives – End of Year tax guide should contact his or her local Pearson May office.
The above is for general guidance only and no action should be taken without obtaining specific advice.
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