You cannot fail to have noticed the increasingly clear demarcation between Labour and Conservative policies on taxation. On the one hand, there is relative tax rigour and prudence combined with a clear, if demanding, public expenditure policy and, on the other, lower tax combined with lower public spending and greater personal choice. Inheritance tax has hit the headlines recently as a possible target for reform. It is estimated that IHT will yield 2.8bn in 2004/05, so it is becoming a serious contributor towards Government spending. Although the IHT threshold has been lifted by 32 per cent since 1997, the average house price has increased four times as fast. Combine this with the combination of the gift with reservation provisions and the new pre-owned assets tax, which together make effective gifts of real property almost impossible, and you can almost see the Monty Burns-like smile of self-satisfaction on the faces of those who collect the tax. The corollary is, of course, a cacophony of “dohs” from the house-owning, IHT-paying public. Then there is stamp duty which, over the last 11 years, has produced a ninefold increase in revenue from 465m to 4.3bn for the Government, with no real prospect of imminent reform. This is therefore an excellent time for financial advisers to capitalise on a high-publicity subject by offering a year-end tax-saving audit to their clients and prospective clients. In the four weeks left before the start of the 2005/06 tax year, there are some strong messages and reminders to be given to a wide cross-section of clients, all of whom have the potential to improve their financial lives. As well as checking for last-minute ways to minimise tax in the closing tax year, the best results are secured by planning in advance to ensure that as little tax as possible is paid next year. Isa providers will be exhorting us to maximise our contributions to these tax-free plans before the tax year closes and we should listen. The big investment story concerns equity income funds and where better to hold income-producing equities than in an Isa? The benefit of compound reinvested (non-tax-depleted) dividends really shows over the year. Each of a couple can have an Isa so last-minute gifts from one of a couple to the other to facilitate investment should be seriously considered. It is also worth remembering that only a tiny proportion of UK taxpayers use their annual capital gains tax exemption. Doing so before the end of the tax year is well worth considering, at least to uplift the base value of a portfolio. The bed and breakfast rules need to be kept in mind but so does the use it or lose it nature of the annual CGT exemption. There is no carry forward. Do not forget the children. The child trust fund has raised public awareness of the importance of thinking ahead on finances. There might not be much in the way of last-minute year-end planning you can do for children (well, for their parents or grandparents, to be precise) but you can think about maximising the use of the available tax exemptions and allowances for next year. Investing for children is highly topical and potentially big business, if only due to the potential volume it can generate. For those clients who run their own business, the opportunity to improve the family’s net finances through salary and, where appropriate, dividend payments will be tempting. Like the annual capital gains tax exemption, an individual’s personal allowance and unused 10 per cent or basic-rate tax band cannot be carried forward. But anyone considering planning to maximise the use of these allowances would be well advised to consider the need to justify salary fully if it is to be deductible and to think very carefully about dividend payments in the light of the latest activity surrounding dividend payments to non-contributing shareholders, largely centred on the Arctic Systems’ case. Professional advice is definitely needed here. Enterprise investment schemes and venture capital trusts are attractive from a tax point of view but keep in mind the basics of risk/reward theory. And back to inheritance tax. As is the case every year, a quick check on capacity to use the annual exemption may yield some opportunities to diminish taxable estates. The end of this tax year and the beginning of the next sees the commencement of the pre-owned assets tax charge on assets caught by this latest anti-avoidance measure. Some taxpayers may not even know they are caught, so checking the position for known past givers will be worthwhile. There is always the opportunity to elect for the offending asset to be treated as part of the taxable estate if you do not like the Poat. These are just a few of the year-end must-dos. Offering a year-end tax-saving audit to key clients will be a valued and ultimately rewarding activity.