THE Budget is almost upon us, heralding the end of another financial
year and reminding us that time is running out for the full use of this
year's personal tax allowances.
As Jeffrey Deans points out, Peps are increasingly in demand by S&I
clients because they allow entry into the share market without the
penalties of tax on dividends or capital gains.
General Peps are limited to #6000 per person each tax year so anyone
interested in taking up this year's allowance has only a few weeks to do
so.
''Effectively over the next few weeks a couple with a sizable lump sum
to invest could take out #24,000 in Peps, taking in next year's
allowance,'' says Deans who also points out that anyone unhappy with
their existing Pep can transfer to another without great difficulty.
Now is also a good time to check on the possibility of a one-off
payment to your pension fund to top up the Additional Voluntary
Contributions (AVCs) and maximise the tax-free benefits a pension
provides over the longer term.
For tax-payers in the higher bracket, Business Expansion Schemes
backed by banks in non-recourse loan plans have developed into a very
efficient way of generating a healthy return.
''Though only suitable for 40% tax-payers, some BES can provide a
guaranteed annualised compound return of 30% in only six months,'' says
Deans.
Similarly, property-based investments in Enterprise Zone Trusts can
provide close to 100% tax relief for the higher tax-payer.
''Now is the time to think about these kinds of schemes, all the more
so as some could well be altered or even abolished by the Chancellor
next week,'' says Deans.
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