In a perfect fiscal world, tax planning strategies would be considered and action taken all year round. In real life, however, people are busy with other more commercially pressing matters for much of the year, such as generating enough income and assets to need tax planning in the first place.
The approach of the end of the tax year provides opportunities for taxpayers to maximise the use of the available personal allowances, reliefs and exemptions for the current year. Frequently, this objective can be conveniently addressed as part and parcel of financial planning for any individual.
If certain allowances are not claimed, they will be lost for ever. There is frequently a further possibility of certain allowances or reliefs being lost not simply for the current tax year but as a result of any changes in legislation proposed in the Chancellor's Budget, which is scheduled to be delivered on March 17.
Some of his intended changes are already known following announcements in the pre-Budget report on December 10, 2003. These will need to be factored into any planning action that is to be taken and, indeed, some of these known changes offer positive opportunities.
If ever there was a time in the tax year to consider tax planning strategies, it is now.
This is particularly relevant this year given that the number of higher-rate taxpayers now exceeds three million, many of whom now pay an effective rate of tax of 41 per cent because of the 1 per cent National Insurance surcharge that applies on earnings in excess of £30,940 a year for 2003/04.
Now is also a good time to lay plans for tax reduction over the coming tax year, at least to the extent that the tax rules are not expected to change.
In this Special Report, we cover the main planning opportunities open to UK-resident individuals for 2003/04. Naturally, the situation can change as a result of the forthcoming Budget and, therefore, early consideration of the appropriateness of the many opportunities available is strongly recommended.