Editorial:

End of the Tax Year

From 6 April 2011, National Insurance is increasing, the level at which higher rate income tax will become payable is reducing and with restrictions on the allowances for pensions also coming into force, banking your tax-efficient allowances should be a top priority, especially for basic and higher rate tax payers. With the end of the tax year fast approaching, it is time to start planning!

If you have not done so already, you should consider utilising your annual ISA allowance. For the 2010/11 tax year, you can save up to £10,200 in an ISA, of which up to £5,100 can be invested in a Cash ISA. If you do opt for a Cash ISA, it is a good idea to shop around to secure the best interest rate. Alternatively, the full £10,200 can be invested in stocks and shares. In the new tax year, the ISA allowance is increasing to £10,680 (of which up to £5,340 can be held in cash). These should be banked at the earliest opportunity.

Another tax-efficient option is to make contributions towards a pension. Not only will you be putting your hard earned money away for your retirement, you will also benefit from tax relief on your contribution. Indeed, if you save into a pension through an employer scheme, you could save income tax and National Insurance, if your contribution is arranged through “salary sacrifice”. In addition, whilst your money remains invested in a pension, the fund will benefit from almost tax-free growth too.

Another way to save tax, especially if you are a higher rate tax payer, is to make charitable donations. This has the same effect as extending the basic and higher rate tax bands, or reducing your taxable income. This means that less of your income may be subject to higher rate tax (if applicable) resulting in further tax savings.

With a bit of forward planning, there are many ways in which everyone can save tax. For further advice regarding any aspect of tax planning or how to use tax-efficient investments, please do contact the office to speak with one of our highly qualified advisers.

Philip J Milton & Company Plc, Sterling House, 17 Joy Street, Barnstaple, Devon EX31 1HE.
Tel: 01271 344300  Email: info@miltonpj.net Website: www.miltonpj.net