NFU Mutual offers end of tax year reminder

With the end of the tax year fast approaching, insurer NFU Mutual is reminding customers about a number of important changes that will be made before or on 6th April 2008.

Shelagh Hamer, tax specialist at NFU Mutual comments, “Due to the proposed and impending changes, this year the reasons for thorough tax planning are even more compelling.

“The run-up to the end of the tax year has historically been an important period in the financial calendar. It is a time to make decisions and a time for action if people wish to optimise their tax planning by the 5th April.”

Make an informed decision and pay less tax

Income tax and Pensions
The basic rate of tax is reducing from 6th April 2008. This means that for basic rate taxpayers, pension contributions made in the 2008/09 tax year and going forward will get basic rate tax relief at 20% instead of 22%.

Inheritance Tax and the continued need for planning
The important changes to Inheritance tax that were introduced at the Chancellor’s Pre-Budget Report on 9th October meant that any unused Nil Rate Band allowance will pass to the spouse on death. Welcome news for couples – but IHT still exists and the changes do not take away the need to plan for potential liabilities.

Capital Gains Tax and investments
The proposed changes to the Capital Gains Tax, including the likely removal of taper relief and the introduction of a single rate, are likely to have a wide impact – particularly for people with investment properties.

Annual Allowances and exemptions
The message is clear – use them or lose them. Most annual allowances can no longer be carried forward so if they are not used by 5th April 2008 their potential benefit will be lost forever.

Changes to the ISA rules and the annual ISA allowance
The Government has signalled their commitment to ISAs as a long term savings vehicle by:

Confirming that they will be available indefinitely – replacing the initial commitment for 10 years

Simplifying the structure by removing the concept of ‘Mini’ and ‘Maxi’ ISAs

Increasing the annual allowance by £200 – the maximum for cash ISA will be increasing to £3,600 and £7,200 overall

Permitting transfers from cash ISAs to Stocks and Shares ISA – to encourage people to save for the long term – without affecting their normal annual ISA allowance

Hamer concludes, “These tax changes can seem confusing, so in order to hone your tax planning and make sure that you are making the right decisions, customers should speak to an NFU Mutual financial consultant.”