Are you ready for 2005?

Follow our checklist of topics to consider

• Capital and the related income can normally be transferred between husband and wife without any tax liabilities. Such transfers must be outright gifts and can be made free of both capital gains tax and inheritance tax
• Consider paying your husband/wife/children a salary for working in your business, but only if this can be substantiated by the work done
• Consider taking your husband/wife into partnership if there is a genuine  commercial reason
• Consider one-off or recurring donations to charity

Benefits in kind

• Keep records of business trips showing the date, mileage and purpose of trips to satisfy any Inland Revenue queries
• If your employer requires you to reimburse the full cost of private petrol, you must do so to prevent the car fuel charge applying
• Remember that no tax is charged on most beneficial loans totalling less than £5,000 per employee in a tax year

• You are entitled to £8,200 of net gains free of tax (2004/05). Plan disposals to make use of this exemption
• Consider deferring disposals until after 5 April to delay capital gains tax payment by a full year and maximise taper relief
• If you intend to retire from business in the next few years, plan ahead to minimise tax on disposal of your business or family company
• If you have more than one home, it may be possible to make or revise an election to determine which one will qualify for principal private residence relief
• Claim losses on assets that have become worthless
• It is better to realise gains in a tax year in which your income is taxed at below 40 per cent than to pay CGT at 40 per cent.

Pensions

• Check that your pension arrangements are adequate, especially if you are self- employed or not in a company scheme
• Employees in a company scheme may consider paying additional voluntary contributions to help boost their final pension or may, if eligible, consider contributing to a stakeholder (or similar) pension

Inheritance tax (IHT)

• Review your estate planning strategy
• Review your Will
• Consider lifetime gifts to individuals or trusts (gifts to spouses are normally exempt)
• Maximise business property relief and agricultural property relief
• Life assurance policies can be used as a way of making gifts to beneficiaries, and also to build up sufficient money to pay any IHT that may eventually become due
• The annual £3,000 exemption applies to both husband and wife and can be carried forward for one year, but then used only if the exemption for the later year is utilised first
• Other reliefs are: £250 small gifts exemption, marriage gifts exemption, and gifts for charities, national purposes, public benefit and to political parties