Tax talk, with Patricia Kinahan, partner Hazlewoods LLP

The run-up to January 31 for many people means a panic to complete and submit their dreaded self-assessment tax return

Then once the deadline has passed many just want to forget about tax, other than promising themselves they will do it earlier next year.

But this is exactly the time of year when people should be taking a step back and thinking about tax. Action taken now can mean future tax payments could be significantly smaller than otherwise would be the case.

Tax planning before the tax year end on April 5, 2009 applies equally to individuals looking at their personal finances and owners and managers of businesses.

Even if simply survival is the priority for many in the current economic downturn, there are likely to be things that can be done to lessen their tax burden.

Although many planning ideas are simple, others are more complex and require time and consideration before implementation, so it is never too early to start thinking about them.

Tax planning includes making sure full advantage has been taken of the allowances and exemptions offered by the Government.

For example, for the year ended April 5, 2009 all individuals are entitled to a personal allowance of at least £6,035 and a capital gains tax allowance of £9,600. Married couples should make use of both spouses’ allowances.

If one spouse has not used these allowances but the other has, the couple should consider transferring income-earning assets to the spouse with the lower income.

Clearly there are other issues to consider, not least anti-avoidance legislation, but this type of planning is absolutely legitimate and over several years can save a married couple a significant amount of tax.

An Annual Investment Allowance of 100 per cent of the first £50,000 of expenditure on plant and machinery (excluding cars) was introduced last year. It came into effect from April 1, for companies and from April 6 for unincorporated businesses.

All businesses should, where possible, plan capital expenditure to ensure the maximum benefit is obtained from this allowance each year. If you would like more details about planning ideas to consider before the tax year end please e-mail tax@hazlewoods.co.uk for a copy of Hazlewoods Pre Year End Tax Planning Guide. 2009-01-21T10:33:29