Did You Know - Spring 2007 - For Current information 2010/2011 please click here

Don't forget to use your Capital Gains Tax allowance!

Churchouse Financial Planning has just released its quarterly newsletter to clients for the coming period about what they should be thinking about for their financial planning. This obviously raises some questions as to how clients should receive information from their Advisers and how technology can help. If you are reading this then the demonstration of effective communication has worked!

This next quarter is a vital time of year to get your financial planning correctly positioned. Some would say the most important financial quarter of the year and I agree.

The usual ideas and content is in the newsletter, such as using your ISA (Maxi ISA: £7,000 /Mini ISA: £3,000 maximums for 2007/2008) allowances before the 06th April 2008 deadline and ensuring that as much tax efficiency has been used with pensions, if appropriate. New allowances for Tax year 2009/2010 are Stocks and Shares ISA £7,200 or Cash ISA £3,600.

UPDATE 2009
The Chancellor, Alistair Darling, has announced in his April Budget 2009, that the ISA allowance will increase to £10,200 for individuals from 2010/2011. For individuals over the age of 50, the increase applies in this tax year 2009/2010 from the 6th October 2009.

But what of the less obvious tax allowances that, for some, are just as valuable if not more valuable?

I am referring mainly to the use of the Capital Gains Tax allowance (CGT) which which is highly valuable especially to a higher rate taxpayer. Many will know that this annual allowance is lost if not used in the tax year available.

For 2007/2008 the allowance is £9,200 for each individual and £4,600 for trusts. This is available to both partners, again, if appropriate. New allowances for Tax year 2009/2010 are £10,100 for individuals and £5,050 for trusts with the balance of the gain charged at 18%.

Many clients will be used to using their ISA allowance by investing in OEIC's (Open Ended Investment Companies) and the older style Unit Trusts. So using an OEIC outside the ISA wrapper should be an easy concept to understand and to recognise its advantages when coupled with further tax savings. For years stockbrokers have achieved growth in a tax year with this CGT objective as their target. But what about using an Independent Financial Adviser to meet the same objective.

This can be achieved easily by using a provider platform (many are available) and purchasing low yielding and diversified OEIC's for clients with the objective of capital growth rather than dividend receipts. As the portfolio grows over a tax year then technology can help in monitoring progress and performance and taking the relevant gains when (and if) available. The value of investments can fall as well as rise and you may not get back the capital you invested. We would also need to understand your circumstances and particularly your attitude to risk before investing. There is no guarantee that you will be able to use your CGT allowance by this method.

This is also likely to involve greater contact with you (and possibly your Accountant) over the next tax year, but this could allow us to help you take advantage of this valuable allowance.

If you would like to review your existing investments or consider new arrangements then please speak to Churchouse Financial Planning Limited on 01483 578800.

For guidance and information purposes only and does not constitute advice or recommendation to invest. The value of funds can fall as well as rise. Please seek Independent Financial Advice before proceeding with any changes/new contracts. The Financial Services Authority does not regulate taxation advice.