Year end opportunities

As we approach the end of the tax year (5/4/2014) there are some fantastic tax planning opportunities.

-The lifetime allowance for pension funds is being reduced from £1.5m to £1.25 there are people who may be in a position to fund up to the lifetime limit or seek to apply for one of the 2 types of protection available if the lifetime allowance has been reached or they feel it will be reached prior to retiring.

-The annual pension contribution allowance is being reduced from £50k to £40k again there may be people who will want to fully fund their pensions in this tax year.

-If you fully fund this years pension contribution it may be possible to us “carry forward” and fully fund the pension contributions for the previous 3 tax years & mop up unused tax reliefs.

-Any one who has paid high levels of income tax in this tax year or is Self Employed & has a high income tax bill to pay on July the 31st can obtain 30% income tax relief on investments made into Enterprise Investment Schemes (EIS) & Venture Capital Trusts (VCT’s), there are other tax benefits as well on Capital Gains Tax (CGT) & Inheritance tax (IHT).

-Use your CGT which is currently £10900 per annum, this allowance is lost if not used, any CGT liability is paid by January the 31st following the previous tax year end April the 5th.

-Use your ISA allowance which is currently £11520 again this is a use it or lose it allowance.

-For people earning £50k plus or £60k, grossed up pension contributions reduce net income to offset the tax charge on Child Benefit payments.

-If a high rate or additional tax rate payer 40% or 45% is encashing an insurance Bond and has made a gain this will be “top sliced” and the slice will incur a tax charge at your marginal rate, you can use pension contributions to enlarge your basic rate 20% tax band and not only enjoy tax relief on the pension contribution but also save the extra tax which would have been charged on the bond gain.

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