Simple tax planning

Inheritance Tax

. Annual exemption - Gifts of £3000 per year can be made free from Inheritance Tax (IHT). An unused exemption can be carried forward one year so that a total of £6000 could be gifted. For a husband and wife this could total £12,000.
. Children got married then a gift of £5000 per parent can be made in year of marriage.
. Grand children got married, then a gift of £2500 per grandparent can be made in year of marriage.
. Consider utilising the use of the annual IHT nil band. This changes yearly. For instance, 2007/8 = £312000. Do this either by making gifts as above or inserting appropriate clause in your will.

Investments

. Invest in an ISA before 5 April and take advantage of the tax-free savings it allows.
. Consider transferring income-generating assets between spouses/partners to the person with the lowest income.
. Look at tax-free investments offered from National Savings.

Pensions

. Higher rate taxpayers making payments to their pension could attract tax relief at their highest rate.
. Pay into Family pension - under stakeholder pension rules you can pay into a pension scheme for your children. A payment of £2080 in 2006/7 would have become £3600 with the government's contribution and the growth is tax-free. These amounts increase annually.

Capital Gains Tax

. Consider transferring assets between husband and wife, civil partners, before sale to utilise annual capital gains exemption
. If you are married or in a civil partnership consider one spouse selling shares to maximise annual exemption and then the other immediately buys the same number of shares.
. Sell shares and then buy back with an ISA to utilise the annual exemption.

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