Are you making the most of your allowances and the reliefs available? Are you fully funding your tax-efficient investments? If you are unsure, follow our tax avoidance guide to some of the areas you should be looking at.

Tax-efficient ISA
If you are a taxpayer, make sure you consider your Individual Savings Account (ISA) options. Investments held within the ISA wrapper are free of income tax and capital gains tax.

A Maxi ISA permits you to invest up to £7,000 in stocks and shares. If you choose to invest in cash, this is limited to £3,000 per tax year.

Pension to the max - Are you fully funding your pension provision? You should be, as tax relief is given on all pension contributions up to the current limits below: Age at start of tax year PPP* RAP 35 or less 17.5% 17.5% 36-45 17.5% 20% 46-50 17.5% 25% 51-55 20% 30% 56-60 22.5% 35% 61-75 27.5% 40% * No relief for contributions on earnings over £105,600    Contribution without net earnings £3600 gross pa. 2006/07 All Pensions: Lifetime Allowance* - £1,500,000 Lifetime Allowance charge - 55% if excess drawn as cash Lifetime Allowance charge - 25% if excess drawn as income Annual Allowance - £215,000 Annual Allowance Charge - 40% of excess Max Rax Relievable cont. - 100% of relevant UK earnings (or £3600) Maximum Lump Sum* - 25% of pension benefit value *Subject to protection for excess amount A £100 gross contribution currently costs you only £60 if you are a higher-rate taxpayer, and £78 if you are a basic-rate taxpayer. Use your CGT allowance You can make capital gains of up to £8,200 on the disposal of assets and investments in the current tax year (2006/7) without paying tax. Everyone has their own allowance, so a couple could make up to £16,400 of gains before any capital gains tax (CGT) would be payable. If you have larger profits, you could make the most of this allowance by considering selling some of your holdings, up to the £8,200 limit, to reduce your potential future tax liability. "Everyone can earn an income of up to £5,035 before income tax is payable." Personal allowance In the current tax year (2006/7) the Inland Revenue allows everyone to earn an income of up to £5,035 before income tax is payable. If your husband or wife is in a lower tax band than you, you could pay less tax by transferring savings and investments into your spouse's name. Avoid inheritance tax The nil-rate band for inheritance tax (IHT) is currently £285,000. There is a levy of 40% on the excess value of an estate above this amount, including your home, possessions, savings and investments. One option to reduce the value of your estate is to gift money during your lifetime, using "potentially exempt transfers" (PETs) and "exempt transfers". PETs are gifts that are out of your estate provided the donor survives for seven years. If you die before the seven years are up, the value of the gift on a sliding scale is added to the value of your estate.

VCTs and EISs
If your attitude towards investment risk is at the higher end of the spectrum, then a Venture Capital Trust (VCT) can offer attractive tax benefits. A VCT invests in a portfolio of small, often early-stage enterprises. You can defer any CGT you owe by transferring gains made within the period running from 12 months before the gain is made and 12 months after to a new issue of shares in a VCT. No CGT is paid until these shares are sold. Income tax relief at 30% on up to £200,000 of investment in new VCT shares is available and dividends are tax free from all VCT shares, and there is no CGT to pay on any gains made within the trust.


An Enterprise Investment Scheme (EIS) offers a 20% tax incentives, but has a higher total upper limit of £400,000 per tax year. An EIS invests in a single business in contrast to a VCT, which invests in many companies.

If you want to discuss ways in which you can reduce your tax bill, it's crucial that you talk to us sooner rather than later. Don't let the tax clock beat you - please e-mail or contact us for further information.