Gazette Business

Last minute, lost opportunity

10:08am Friday 20th January 2012

WHILE most of us were tucking into the turkey and trimmings, 845 people chose Christmas Day to file their tax returns.

Another 2,408 filed on Boxing Day. Astonishingly, with the January 31 deadline now only days away, some people have still not dealt with this annual chore.

As a tax adviser it is not so much the last-minute rush I find exasperating (that goes with the job), but the fact that I see so many missed opportunities to save tax.

The simple fact is that by dealing with things in a timely fashion you give yourself – and your adviser if you have one – time to think and to plan.

There are many ways in which you can legally, legitimately and often very simply save tax.

In the run-up to the end of the tax year on April 5 there are a number of things you should consider.

Have you made use of your annual ISA allowance to shelter dividends, interest and capital gains from tax?

Have you made use of your annual capital gains tax and inheritance tax gifts allowances?

If you are exposed to higher rates of tax, especially the ‘marginal’ 60% rate on income just over £100,000 or the 50% rate, have you considered making tax relievable pension contributions?

If you are in business, you should always think well ahead of your year end about the timing of expenditure – a difference of a day can govern which year tax relief falls into and can bring forward or push back by 12 months the day on which that decision affects your cash flow.

Have you thought about whether you should trade as a limited company?

Even after April 5 you may still be able to reduce the following January’s tax bill.

You might, for example, consider making a gift to charity under Gift Aid and setting the amount back to the previous tax year – but beware, you can only do this by making the payment before you file the tax return.

The later you leave things the less likely you are to have time to make an informed decision.

The only person who benefits then is the Chancellor.

Why not make a New Year resolution: be proactive about tax, not reactive, and keep more of your money in your own bank account, preferably, of course, an ISA.

Paul Aplin OBE is a tax partner with A.C. Mole & Sons and chairman of the Technical Committee of the Institute of Chartered Accountants in England & Wales Tax Faculty. He and Taunton-based tax partner Amanda Gunter can be contacted on 01823-624450, while Bridgwater- based tax partner Paul Kingdom can be contacted on 01278-446088.

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