A review of your financial and tax planning to maximise your net income and your business and family assets should now be high on your agenda prior to the tax-year end on 5 April 2012.

Proper tax and financial planning could lower and defer the tax you pay, freeing up cash for investment, business or personal purposes. With the 40 per cent threshold coming down as the tax personal allowance goes up, there are still ways for higher rate taxpayers to maximise their allowances ahead of the tax-year end.

Making sense of your planning and finances
From 6 April 2012 the threshold for higher rate will be taxable income of £34,371, down from £35,001. So, even after including the increase in the basic personal allowance from £7,475 to £8,105 the normal higher rate threshold will remain at £42,475.

We can help you make sense of the areas you need to consider for your planning and finances, which is essential with the ever-changing tax laws and the wide range of financial products and solutions available. Below are some of the main areas that you may wish to consider discussing with us before the tax-year end.

Married couples
Married couples should consider whether equalisation or joint ownership of investments will transfer income to the lower-taxed one. This can be done free of capital gains tax (CGT) for married couples and registered civil partnerships.

Unmarried couples can equalise non-CGT assets such as bank accounts and may find it possible to equalise or transfer assets on which gains are less than their annual CGT exemption. Even if an asset is put into joint ownership only the day before it produces income – for example, through interest or a dividend – that income will still be split equally between both owners.

General planning and tax shelters
Reduce exposure to the 50 per cent tax rate and/or minimise the loss of personal allowances by deferring income into 2012/13 where possible, or accelerate expenditure into 2011/12.

Consider selling assets that stand at a loss in order to crystallise that loss for use against current year gains.
Review your investments to see if any have become of negligible value which could crystallise a useable loss.
If you have more than one residence, make sure you don’t miss the opportunity to minimise CGT by electing within two years of any change in combination of residences.

For withdrawals from 6 April 2012, currency gains and losses will be taken out of the tax net, so avoid crystallising gains early but be sure to trigger losses before that date.

Revisit deceased estates
If a relative has died within the past two years, a rearrangement of their estate could put income into the hands of family members whose income level is below the 40 per cent or 50 per cent income tax threshold.

Individual Savings Account (ISA) 
An ISA provides saving and investment in a tax-efficient
environment. The current annual ISA subscription
limit is £10,680.

Up to £5,340 can be invested in a Cash ISA, the balance held in a Stocks & Shares ISA. The tax credit on an ISA dividend is not recoverable.

Pension rule changes
Making pension contributions reduces taxable income.
Pension rule changes and the transition to the new annual and lifetime limits in 2011/12 provide opportunities. In particular, people who have been prevented from making pension provisions greater than the £20,000 special annual allowance may be able to increase their pension provision in 2011/12 by using unused allowances brought forward under the new pension regime’s transitional rules.

The annual allowance for contributions is £50,000. Any unused allowance may be carried forward for three years, but anything unused from 2008/09 will be lost after 5 April 2012.

The lifetime allowance reduces to £1.5m from April. Consider if benefits should be taken or registered for fixed protection before 6 April 2012.

Inheritance Tax (IHT)
Use the annual exempt amount of £3,000, the small gifts exemption of £250 per recipient and make regular gifts out of income.

Any death benefits from pension arrangements and life assurance policies should be written in an appropriate trust, so that any proceeds are outside the estate.
Consider lifetime gifts so the seven-year clock starts to run to mitigate IHT on death.

Review Wills, powers of attorney and estate planning arrangements.

Levels and bases of and reliefs from taxation are subject to change and their value depends on the individual circumstances of the investor. The value of your investment can go down as well as up and you may not get back the full amount invested. Tax laws are subject to change, possibly retrospectively. The rules for individuals who are not UK resident or not UK domiciled are different and therefore tax and local laws should be considered by a potential investor.