Get ready for the year end!

IFA Towry has compiled a checklist of areas to review ahead of the year-end deadline on April 5th.

Capital Gains Tax

Make full use of the annual exempt amount by realising capital gains where appropriate - £10,600 in 2011/12 and remaining at this level in 2012/13.

Estate Planning

Where appropriate, use the £3,000 annual exemption (and any unused exemption carried forward from 2010/11). Note that gift aid payments can be carried back to 2010/11 if taxable income in 2011/12 has reduced and would fall within a lower tax band.

Pensions

The lifetime allowance on pension savings is to reduce from £1.8m to £1.5m from 6th April 2012. Individual retirement plans should therefore be reviewed to decide if it is appropriate to apply for fixed protection, thus preserving a £1.8m lifetime allowance and the opportunity to take a larger tax-free sum. This has to be balanced against the requirement that in order to qualify for fixed protection there can be no further contributions or benefit accrual after 5 April 2012.

Individual Savings Accounts (ISA)

The current annual subscription limit of £10,680 p.a. into a stocks and shares ISA doesn’t sound that much but with regular savings this can build to a sizeable savings pot. Make arrangements to use the £11,280 2012/13 allowanceas early as possible in the new tax year – to maximise the benefits throughout the tax year.

Investments for children/grandchildren

National Savings Children’s Bonus Bonds are still available for children under age 16. The limit is £3,000 for each child, currently 2.5% AER compound guaranteed over the first 5 years, then a fixed rate notified at each 5th anniversary to age 21 and a final bonus on the 21st birthday; they are tax-free even if the funds are provided by the child’s parents.