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Tax Reliefs - Use it or Lose it! |
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Tax Reliefs - Use it or Lose it! As the tax year end for individuals of 5 April fast approaches, the clock is therefore ticking for taxpayers to take advantage of certain reliefs and allowances for 2004/05. TaxationWeb (www.taxationweb.co.uk), the UK’s leading independent tax website, brings you a handy reminder: INCOME TAX – Any unused part of the personal allowance (£4,745 for 2004/05, for individuals aged under 65) and basic rate tax band (£31,400 for 2004/05) are wasted if they are not used by 5 April 2005; CAPITAL GAINS TAX – Plan asset disposals between now and 5 April, to take full advantage of the annual exemption (£8,200 for 2004/05). This exemption is available to both husband and wife; INHERITANCE TAX – An annual exemption (3,000 for 2004/05) is also available to both husband and wife. This allowance can be carried forward but only for one tax year, and will be lost if it still remains unused. There is also a ‘small gifts’ exemption of £250, which can be paid in each tax year to any number of suitable donees; INVESTMENTS – A maximum £7,000 per annum can be invested in an Individual Savings Account, tax-free. In addition, qualifying Enterprise Investment Scheme investments attract 20% income tax relief, up to a maximum of £200,000 (for 2004/05); PENSIONS - The self-employed and employees not in pensionable employment can normally contribute up to £2,808 net (i.e. £3,600 gross) to a personal pension scheme for 2004/05, irrespective of their level of earnings. The same applies to most employees in occupational schemes and earning no more than £30,000 per annum. There is an upper limit on ‘net relevant earnings’ (i.e. £102,000 for 2004/05), on which the maximum level of contributions is based. Ask your accountant or financial adviser to review your tax affairs before 5 April, but leave enough time to act on any tax saving ideas they provide. |
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About The Author  Mark McLaughlin is TaxationWeb's Co-Founder, Director and Technical Editor. He is a Fellow of the Chartered Institute of Taxation and a member of the Association of Taxation Technicians and the Society of Trust and Estate Practitioners. He lectures on tax subjects, is co-author of Tottel's IHT Annual and Ray & McLaughlin's IHT Planning, and Editor of Tottel's Tax Planning and Annual series. Mark's work has also been published in Taxation, Tax Adviser, Tolley's Practical Tax, Tax Journal and Simon's Weekly Tax Intelligence. Since January 1998, Mark has been a consultant in his own tax practice, Mark McLaughlin Associates, which provides tax consultancy and support services to professional firms. He publishes a regular 'Tax Update' e-Newsletter for clients and other professional firms. To receive future copies, contact Mark via his website. |
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Article Added Tuesday, 01 March 2005 |
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