New Tax Year Wealth check

Take a few minutes to assess your position!

The start of a new tax year is an excellent time to assess your financial and tax position, especially as we have just started the 2007/07 tax year . Why not take a few minutes to consider some of the areas you may wish to discuss further with us? We have provided a selection of topics it may be prudent for you to consider.    

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 (£20,100 in 2007/07). Once it goes over that limit, the age allowance gradually 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 (£2,350 in 2007/07).

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

■ Pension allowance  Have you funded your pension 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 £105,600 for tax year 2007/07).

Tax-friendly investments 

■ ISA allowance  You can put up to £7,000 (2007/07) 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-profits 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 £8,800 for 2007/07. You can make profits up 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.

So why not take a bigger slice of the wealth cake. Act now before nother tax year passes; e-mail or contact us to see how we can help you take full advantage of what is rightfully yours!