Top Tax Tips

The current 2008/09 tax year will be remembered for an unprecedented series of financial and economic events. With Bank solvencies, cash flow and in some instances merely financial survival in the foremost thoughts of many, it is more important than ever to review your personal finances and consider any of the Tax Breaks that are now available. Here are a few brief thoughts:-

1. Maximise Tax Efficient Savings – an individual may invest up to £7,200 into Individual Savings Accounts (ISAs) and for the risk averse, up to £3,600 may be in Cash.

2. Keep Personal Tax Rates as low as possible across the family.

3. Save for Retirement – tax relief is available on Pension Contributions paid at the individual’s highest marginal rate, based on a maximum investment of your earnings or the Annual Allowance of £235,000 for 2008/09, whichever is the greater; furthermore, Pension Funds enjoy virtually Tax Free Returns.

4. For the speculative investor, Venture Capital Trusts (VCT) or Enterprise Investment Schemes (EIS) give potential for tax efficient returns over the longer term. Tax relief (30% VCT and 20% EIS) is available for investment into new issues.

5. Capital Gains Tax Planning – individuals have an annual exemption and can generate tax free capital gains of £9,600 for 2008/09; it is possible to carry forward losses incurred on disposals to subsequent tax years but the annual exemption cannot be carried forward.

6. Negotiate a more tax efficient employment package, not only to benefit yourself, but also your employer. For example, consider a SMART (Save More And Reduce Tax) Pension or Salary Sacrifice Option where the employer pays into a Pension Scheme on behalf of its employees. The objective is to increase employees' take home pay and reduce National Insurance (NI) costs for both employee and employer.

7. If you have a Company Car, pay Income Tax at the current top rate of 40% and the taxable value is more than £3,000 per annum, it could be more cost effective to purchase a vehicle, saving the Tax Charges and claiming business mileage within the Revenue’s permitted rates.

8. Gifts via Gift Aid to UK Registered Charities are made from post taxed income. Therefore, 40% tax payers who, for example, donate £1,000 to charity, may claim an extra £250 relief to offset against their Income Tax liability.

Tax efficiency is dependent upon individual circumstances; it is important therefore to get tailored advice from an independent source. For tax, investment, mortgage and pension advice contact Michael Cracknell, Financial Planning Manager at Birkett Long on 01206 217309 or email

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.