This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.


Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet
Personal Tax Pre Year End Checklist
01/03/2002, by Mark McLaughlin CTA (Fellow) ATT TEP, Tax Articles - General
Rating: 0/5 from 0 people

TaxationWeb by James Darmon

Individuals Pre Year End Checklist5 April 2002 is looming fast, but there is still time to save some tax.

Many tax allowances are lost if not used by the end of the year.


Anyone over 18 can invest up to £7,000 in an ISA. You can invest up to £7,000 in 2001/2002, and your partner can also make the same investment. ISA income is tax free, and the 10% tax credit on dividends can be reclaimed (unlike other investments).

Those aged 16 and 17 can put up to £3,000 into a cash mini ISA.


If possible, use the £7,500 annual CGT exemption. You can no longer “bed and breakfast” shares to use up your CGT exemption. This was selling shares, and then buying them back the next day to create a small gain, covered by the annual exemption, and leaving a higher base cost. However, you can “bed and spouse” the shares, meaning that your spouse buys the shares back. Alternatively, if you have a self-select ISA or Personal Equity Plan, this could repurchase the shares.

Remember that your spouse also has a £7,500 annual exemption. If you are likely to make a gain of, say, £30,000 on a disposal of shares, consider transferring half to your spouse, and you could then each dispose of half your holding before, and the other half after the tax year end. In this way, you potentially use four annual exemptions instead of one, and reduce or eliminate your tax bill.

If you have both capital gains and capital losses, careful timing is needed. You can set off losses against capital gains in the same or subsequent tax year. Therefore, if you have shares standing at an unrealised loss, you can reduce any capital gains tax bill by selling shares, perhaps under the bed and spouse or similar routes described above.

Income Tax

If you are an employee, check your PAYE coding notice to ensure that the Revenue has got the benefits correct. If you are 65 or over, make sure that you are receiving age related additional personal allowances.

If you are eligible for children’s tax credit, you must claim it.

If you have a company car, check your CO2 emissions! From 6 April 2002, your taxable car benefit is based on the level of emissions. Reductions for high business mileage are withdrawn. If you do high business mileage, take advice on whether you would be better off owning your car, and using the Approved Mileage Scheme. This allows you to charge the company 40p per mile for the first 10,000 miles, and 25p per mile thereafter, tax-free.

If someone in your family is a non-taxpayer, he or she may well be entitled to tax back on bank and building society interest. You can use form R85, available from your local bank, to arrange to have the interest paid gross in the first place.

If it is possible to move assets around the family, try to make sure that non-taxpayers get enough income to use their personal allowances (£4,535 in 2001/2002). The simplest action is to transfer income-producing assets (for example cash and shares) to a non-tax-paying spouse, so that he/she receives the investment income.

Children also have personal allowances, but putting income into the hands of children is subject to anti avoidance rules: income over £100 comes back to be taxed on the parents. The solution, if possible, is for the grandparents to transfer the assets to the children.

Inheritance Tax

The discussion of transferring assets brings into mind the question of inheritance tax. There is an annual exemption of £3,000 for inheritance tax purposes. If you have not used your previous year’s annual allowance, then your total transfers can be doubled up to £6,000.

The other exemption you may be able to use is that for “normal expenditure out of income”. If a consistent pattern of giving is established over several years, you may be able to move significant amounts of money out of your estate.


Despite recent falls in annuity rates, pensions still represent a very tax efficient way of saving. One of the features of the new stakeholder pension regime is that even non-taxpayers can make annual contributions of up to £3,600 to a stakeholder scheme. This costs £2,808, after 22% tax relief is deducted at source.

CGT : Business Assets

If you have business assets, such as shares in your employer company, shares in a privately owned non-investment company, or land and property used for trading purposes, it would generally be unwise to sell these before 5 April 2002. This is because capital gains tax taper relief will be given at 75% for assets held for two years from 6 April. This could, for example, include shares bought in an employer company on 6 April 2000. If (as a higher rate taxpayer) you sell these on say 31 March 2002, you would only get one year’s taper relief, and pay tax on the gain at 35%. If, however, you delayed until 6 April 2002, your tax rate would be just 10%.

If you are over 50, and entitled to capital gains tax retirement relief, you should talk to an advisor, to find out the best timing for the disposal of the assets. This is because retirement relief is being phased out, and the amounts available for relief are halved after 5 April.

Tax Efficient Investments

There are a number of tax-efficient investments available, but they are not for everyone. As a general rule, the investments tend to be high risk, or require you to tie up cash for long periods. Some of the best known are:

· Enterprise Investment Scheme (EIS): Subject to certain rules, you can invest up to £150,000 in unquoted shares (including AIM shares) in trading companies. You get 20% Income Tax relief at source, and CGT deferral (with no monetary limit). Provided you hold the shares for 3 years, any gain is tax-free.

· Venture Capital Trusts (VCT): VCT’s are quoted companies, which invest in venture capital companies. Income Tax relief at 20% is available on the investment. Dividends are tax free, and disposals of VCT shares are not subject to CGT if held for at least 3 years. Capital Gains Tax deferral is again available, but with a £100,000 limit.

· Film Partnership investments can be used by higher rate taxpayers to defer tax on income within the last 3 years and gains in the current or previous year.

The comments in this article represent the writer’s own views, and are necessarily of a general nature. We strongly recommend that you seek appropriate professional advice before taking any action based on these comments. If you want to consider any action on these please contact Forbes Dawson for advice on 0161-245-1090.

About The Author

Mark McLaughlin is a Fellow of the Chartered Institute of Taxation, a Fellow of the Association of Taxation Technicians, and a member of the Society of Trust and Estate Practitioners. From January 1998 until December 2018, Mark was a consultant in his own tax practice, Mark McLaughlin Associates, which provided tax consultancy and support services to professional firms throughout the UK.

Mark is now a consultant with The TACS Partnership,  an independent tax advisory firm that provides high quality, independent advice on all UK taxation matters.

He is a member of the Chartered Institute of Taxation’s Capital Gains Tax & Investment Income and Succession Taxes Sub-Committees.

Mark is Chief Contributor to McLaughlin’s Tax Case Review, a monthly journal published by Tax Insider.

Mark is the Editor of the Core Tax Annuals (Bloomsbury Professional), and is a co-author of the ‘Inheritance Tax’ Annuals (Bloomsbury Professional).

Mark is Editor and a co-author of ‘Tax Planning’ (Bloomsbury Professional).

He is a co-author of ‘Ray & McLaughlin’s Practical IHT Planning’ (Bloomsbury Professional) 

Mark is also co-author of ‘Incorporating and Disincorporating a Business‘ (Bloomsbury Professional).

He is Editor and co-author of ‘HMRC Investigations Handbook‘ (Bloomsbury Professional).

Mark has also written numerous articles for professional publications, including ‘Taxation’, ‘Tax Adviser’, ‘Tolley’s Practical Tax Newsletter’ and ‘Tax Journal’, which provides free information and resources on UK taxes to taxpayers and professionals, and TaxationWeb’s sister site TaxBookShop.

Mark is a Director of Tax Insider, and Editor of Tax Insider, Property Tax Insider and Business Tax Insider, which are monthly publications aimed at providing tax tips and tax saving ideas for taxpayers and professional advisers. He is also Editor of Tax Insider Professional, a monthly publication for professional practitioners.

Mark is also a tax lecturer, and has featured in online tax lectures for Tolley Seminars Online.

Mark co-founded TaxationWeb ( in 2002.

Back to Tax Articles

Please register or log in to add comments.

There are not comments added

Tony Talks - 

ICPA Chairman, Tony Margaritelli discusses Defining Moments that made him go WOW and he takes a look at GDPR which hasn't gone away in his latest in practice blog.