David Myrddin-Evans, Divisional Director and Head of Office, Brewin Dolphin, Cardiff, provides a last minute check list for organisations to be aware of before 5th April,
Things you should have done this tax year or should do now:
· Large pension pots should apply for fixed protection before 6th April, to get a personal lifetime allowance (total pension fund) of £1.8 million instead of £1.5 million. Done?
· Unused pension contributions will disappear from 6th April so make use of your 2008/09 allowance (3 year carry forward rule). Especially relevant for 50% taxpayers. Done?
· If your taxable income for the 2011/12 tax year is over £100,000 you could make a pension contribution before the tax year end to bring your effective taxable income down to £100,000 and save paying the marginal 60% rate of tax that applies to income between £100,000 and £116,210. Every £2 earned over £100,000 means you lose £1 of your personal allowance. Done?
· Utilise the 2011/12 ISA allowance of £10,680 for your self and spouse and Junior ISA allowance of £3,600., wherever possible. Done?
Qualifying Life policies, which can include Maximum Investment Plans and whole of life policies with investment content, are now restricted to maximum contributions of £3,600 pa. Anyone who already has such a plan and is contributing more than this should not adjust the premiums in any way, which could jeopardise the tax concessions built in.
· A VCT contribution made before 6 April will reduce taxable income for the 2011/12 tax year by 30% of the investment made.
Things to think about as we go into the new tax year:
· Before April 2013 50% taxpayers should be maximising pension contributions to get the 50% relief and could also take advantage of the 22% tax gap between CGT and income tax to increase capital return from investments.
· Genuine VCTs and EISs will be more viable from April 2012 – the investment limits are being extended on qualifying companies – so they can invest in larger businesses and potentially reduce the levels of risk to investors. Significant capital gains made in the last 3 years can be deferred by investing the value of the gain into an EIS, if the current years CGT exemption has already been used.