February 2005

2005 TAX SAVING TIPS

Income Tax

Make sure that children use their personal allowances possibly by being paid for work done in the family business or any distributions from a family trust or investment of capital gifts from relatives other than their parents.

Capital Gains Tax

You have an annual CGT exemption rate which amounts to £8,200 for 2004/2005. Take full advantage of it to minimise your CGT liability on shares that you hold. If you don’t use the annual exemption you will lose it!

Inheritance Tax

Annual exemption of £3,000 is available for gifts made in any one year without it forming part of their estate for Inheritance Tax purposes. If unused, it may be carried forward for use in the following year only.

Pensions

Most people can normally contribute up to £2,808 into a pension scheme irrespective of their level of earnings. The Inland Revenue will increase this by £792 taking the total amount to £3,600.

ISA Investments

You can invest up to £7,000 a year in an Individual Savings Account to protect any future profits from tax.

Remember you only have to 5 April 2005 to take advantage of these various reliefs and allowances for 2004/2005.