Our top five tax-saving tips:
Maximise Pension Contributions
A pension remains one of the single most tax-efficient vehicles for long-term saving, particularly for higher rate taxpayers, where effective rates of tax relief can be up to 60% for high earners.
There is the additional prospect of saving National Insurance, 12% for employees and 13.8% for employers.
Transfer savings of up to £11,280 into a tax-free ISA to reduce income and capital gains tax.
Venture Capital Trusts
Venture Capital Trusts (VCTs) give 30% Income tax relief up-front based on a 5 year holding period as well as tax-free dividends. Whilst care is needed to select appropriate VCTs, they can form a valuable plank of an Income tax mitigation strategy.
Enterprise Investment Schemes
Enterprise Investment Schemes (EISs) give 30% Income tax relief up-front based on a 3 year holding period, relief from Inheritance tax after just 2 years, and CGT deferral. Whilst care is needed to select appropriate EISs, they can form a valuable plank of an Income tax, Inheritance tax and CGT mitigation strategy.
Personal Tax Planning
Where one spouse pays tax at a lower rate, ensure that best use is made of personal allowances, age-related personal allowances and the CGT Annual Exemption of £10,600. With the Inheritance Tax Nil Rate Band now frozen at £325,000, ensure that gift allowances are maximised and any outright gifts or gifts to trusts are made to start a 7-year clock running.
[Matthew Clark, 5 Top Tips for Last Minute Tax Planning 2012/13, 2 April 2013]