This document provides an overview of various tax planning strategies and deadlines for the current financial year, including: 1) Capital gains tax rates are changing in April 2008, so some may see reductions while others like business owners may see increases. Pension contribution limits and rules have also changed. 2) Key deadlines this financial year include the end of the CGT annual exemption period on April 5th and ISA contribution limits also increase on this date. 3) Estate planning is recommended to take advantage of increased inheritance tax thresholds, which may allow most estates to be passed tax-free. Careful consideration of income and assets is advised.

1. HERTS FINANCIAL FOCUS
TAX PLANNING –
FINANCIAL YEAR END
Get to the point R eading this you should have already filed your
“Everyman is entitled if he
Our sole objective is to
income tax return for 06/07 and be considering
can, to order his affairs so
how you can improve your financial strategies before
provide you with a
that the tax attaching
the end of the current financial year.
under the appropriate Acts
targeted, discreet, and
is less than it otherwise
Significant changes to Profit Extraction
would be.” House of Lords
private, better business
Capital Gains Tax Salary & bonus or dividend,
Lord Tomlin – Duke of
IR35 regulations & the new
service, focussed on you.
Capital gains tax (CGT) is cur-
Wellington v Inland
pension rules are factors that
rently charged at your marginal
Revenue Commissioners
make the task of extracting
rate of income tax (up to 40%),
Do you want to work with a
profits from your company
but the rules are changing from
hard to get right.
6 April 2008 with a flat rate of
collaborator?
Investment Schemes (EIS)
Technically, the new pen-
18% being introduced. Taper which are eligible for income
sion rules mean that instead of
relief for business and non-
Do you want insight with practical
tax relief at 20% on invest-
funding pension savings your- CGT for transferring taxable as-
business assets will cease to ex- ments of up to £400,000 a year.
solutions?
self out of post-national insur- sets into venture capital trusts.
ist. So for some there will be Dividends and capitals gains
ance contributions (NIC’s) in- They are not Inheritance Tax
capital gains tax reductions are also tax-free. As a business
Where are the gaps in your Wealth
come, your company could free.
while for others, particularly asset they can be free of
contribute free of NIC’s (with a
strategy?
business owners, there will be VCT Wealth Warning Inheritance Tax after 2 years.
typical saving in the region of
increases.
13.8%). However, under pre- Any investment in a Venture EIS Wealth Warning
Planning point – under- existing rules, HM Revenue & Capital Trust (VCT) should be
EIS investments will generally
stand how this will impact on Customs (HMRC) is challeng- viewed as a high risk and long-
be equities issued by unquoted
the expected proceeds of your ing ‘extraordinary’ contribu- term commitment (i.e. at least
trading companies, which are
business sale & how this will af- tions and arguing for dis-al- over five years, but plan for a
non-readily realisable invest-
fect your future living. lowance of tax relief for the seven to ten year timeframe).
ments (as defined under the
company in circumstances Due to the nature of the un-
Planning point – Are you FSA Rules) and for which there
where company contributions derlying assets, VCTs are highly
maximising use of the CGT
Call Ivor, 0 1 7 2 7 8 7 0 6 1 3 , &
is a restricted market. It may
have previously been at a sig- illiquid. As such investors must
Annual Exemption (£9,200 therefore be difficult to deal in
arrange to complete our short
nificantly lower rate. be aware that they may have
07/08) for you and your part- such EIS Investments or to ob-
The position on IR35 con- difficulty, or be unable to re-
ner, especially in light of the
10 minute Wealth Strategy
tain reliable information about
tinues to be controversial, but alise their shares at levels close
CGT changes above? It is an their value at any given point
Questionnaire.
in some cases personal service to that that which reflect the
annual allowance and cannot in time with any degree of cer-
companies are being dissolved value of the underlying assets.
be carried forward and is likely tainty. You should be aware
Used specifically for entrepreneurs
as 'consultants' become em- The tax incentives available to
to be worth more to you this that there may be difficulty in
ployees once more. investors exist in order to at-
it will seek out gaps that you, your
year than next year. selling EIS Investments at a rea-
tract investment into an asset
Planning point – Taking a sonable price and, in some cir-
business or family could fall
Tax relief on capital class that warrants high risk
salary & bonus or dividend still cumstances; it may be difficult
expenditure categorisation.
through.
requires careful consideration. to sell them at any price. The
Capital allowances are the tax A dividend is paid free of NICs, Planning point – Consider value of investments can go
We have over 20 years experience
deduction your business ob- which would typically cost investing in Enterprise down as well as up. Any EIS
tains for depreciation and
from industry sectors such as
13.8%, or even up to 23.8% in
losses on disposal of assets such combined employer and em-
Accountancy, Law, Financial
Wealth Warnings
as cars & machinery used in ployee contributions. The out-
Services, Insurance, Industry,
the business. The end of the come can be a considerable
tax year and the end of your ac- saving (hence IR35) but there
Leisure, International and
This article is for general information only and is not
counting year will govern can also be an increase in the
intended to be advice to any specific person. You are
Charitable Organisations.
when tax relief can be claimed. value of the shares of your
recommended to seek competent professional advice before
company, if valuation is ever
Planning point – A purchase taking or refraining from taking any action on the basis of
As a team we can be a formidable
necessary (e.g. for inheritance
just before the end of the cur- the contents of this article. Please note all references in this
tax). 5 April is your last date
partnership. Try us initially for 10
rent accounting year will usu- publication to marriage and spouses should be read as
for paying a 2007/08 dividend,
ally mean the allowance is including registered same-sex civil partnerships and civil
minutes. Then make your mind up.
and higher rate tax on that div-
available a year earlier than partners. Levels, basis of and relief from taxation are
idend will not be due until 31
would have been the case, had subject to change as UK legislation, regulations and
January 2009.
Kellock Wealth Management a trading style
the purchase been made just tax regime are amended from time to time. Past
of Trinity House Financial Planning Limited.
after the year end. Similarly, Planning point – Consider performance of an investment is no guide to its performance
the disposal of an asset, partic- investing in Venture Capital in the future. Investments, or income from them, can go
Authorised and Regulated by The Financial ularly a car costing more than Trusts (VCT) which are allow- down as well as up. Risk can be brought about by the
Services Authority 439073. Registered in England
£12,000, may trigger an earlier able for income tax relief on performance of world markets, interest rates, taxes on income
No4740530. Registered address Highland Suite,
claim for relief or even an ad- the amount invested at 30% on and capital, and foreign exchange rates. You may not
Great Hollanden Business Centre Mill Lane
ditional charge to tax. Care up to £300,000 of investments necessarily get back any of the amount you invested. The
Underriver Sevenoaks Kent TN15 0SQ.
needs to be taken as the date a year. Dividends and capital information contained within this article is only directed at
expenditure is incurred is criti- gains are also tax-free but there persons in the United Kingdom.
cal to the timing of tax relief. is no longer any deferral of
01727 870613 • WWW.KWM.CC • IVOR@KWM.CC
13

2. FINANCIAL FOCUS
Qualifying Company can fail. overpay tax. what you are really spending 2008 to make your 2007/08 ISA
now and what you’d like to investment, or lose it. This
Planning point – If you are Inheritance Tax –
spend later. Life expectancy has means that as a couple you can
married or in a civil partner- 51% increase in receipts
increased by 15 years since the make an investment of £14,000
ship and your partner pays no 5 years mid 1970’s. Will you have this year, and a further £14,400
tax, or pays tax at a lower rate
enough money in your retire- after 6 April 2008 when the
(Comparison of tax receipts
than you, consider switching
ment and will it last? limit increases to £7,200 each.
2001/02 and 2006/7 (estimate)
income producing assets into
source HMRC)
your partners name to make Planning point – Pension Gifts To Charity &
use of their £5,225 nil rate per- contributions based on 07/08 Community Amateur
Only 6% of estates are liable to
sonal tax allowance and the earnings need to be paid by 5 Sports Club (CASC)
inheritance tax (IHT) although
£34,600 basic 20% tax band for April 2008. Tax relief will be at
families that have a liability to
When making such a gift you
interest payments. a maximum of 40%, and the
inheritance tax is a much
are likely to have been asked to
Planning point - If you are maximum contribution is an
greater figure.
make your gift under the Gift
employed or are a pensioner, amount equal to your earnings
Aid rules. The charity can re-
Planning point – The 2007
check your tax code, HMRC es- or the annual limit currently
claim currently 22% of your
Pre Budget Report introduced
timates that 5.7 million tax- £225,000 for 07/08 whichever
gift. If you are a higher rate tax
changes that provide IHT free
payers may not be paying the is less.
payer they can receive a fur-
estates for the majority, with
right amount of tax. Tax codes
Planning point – Consider ther 18% if you complete the
joint estates (husband/wife or
for a particular year will be
paying up to £3,600 into a pen- relevant section on your tax re-
civil partners) currently valued
based on the previous year’s in-
sion for a spouse or partner, turn.
at £600,000 or less. However if
come which could be substan-
child, grandchild etc. This is
your estate as an individual is
tially different from the actual Planning point – It’s now
particularly advantageous if the
valued at more than £300,000
income received in the coming too late for this years return
beneficiary is a non-taxpayer
or £600,000 as a couple con-
tax year. but ensure you record all your
because the contribution is el-
sideration needs to be made as
This means that the wrong donations ready to benefit your
igible for tax relief and there-
to how your legacy will be
amount of tax is being paid up chosen organisations next year.
fore a contribution of £3,600
passed on efficiently & effec-
to 22 months before it will be
costs the donor only £2,808.
tively. IHT is still charged at
reclaimed. A continued charge
40% on death less certain re-
for a benefit you no longer ISA’s – don't forget the
liefs. IHT is still a voluntary tax.
have is a regular occurrence. deadline
Retirement
Planning point – Non-tax- Capital gains and most income
payers with interest from a de- in Individual Savings Accounts
Have you forecast your future
posit account should make sure (ISA’s) are tax-free, and they are
spending habits and compared
that they have completed form ideal for saving lump sums and
them to your expected pen-
R85 supplied by the bank or regular amounts.
sion? Is there a match or miss
building society to allow inter- match?
Planning point – With a
est to be paid gross, without
limit of £7,000 on annual sav-
Planning point – Be honest
deduction of income tax. This
ings, you have until 5 April
with yourself and consider
is the most common way to
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