KPMG sent out some top 10 tips this morning for people who’ll fall into the new 50 per cent higher bracket for income tax from next April. They look quite handy, so here’s a shortened version:

1. Try to bring forward income - eg bonuses, dividends - to the current tax year so it will get taxed at the old tax rate.

2. If you close your deposit account, the bank will pay closing interest to the date before 5 April - ie at the currrent tax rate.

3. When you encash an investment bond, the profits are subject to income tax so consider doing so this tax year.

4. Those with family trusts should consider making income distributions to beneficiaries of all accrued income in this tax year, not next.

5. Review your investment portfolio - and consider switching from products that are taxed as income to those that are taxed as capital gains.

6. Transfer income-producing assets to your spouse, if they earn less than £150,000.

7. Ask your employer to consider a share incentive scheme instead of a cash bonus - as you can pay capital gains tax on shares which is lower than the income tax you’d pay on a bonus.

8. Consider investing in venture capital trusts or enterprise investment schemes, which offer tax breaks on the initial investment and no tax when the shares are sold (providing you’ve held them for 5 years for VCTs or 3 years for EISs).  Though note that these schemes can be pretty risky so it’s not worth investing in them purely for the tax breaks if you might lose your money!

9. Consider deferring claims for tax relief or capital allowances to the next tax year so that the relief you get is at a higher rate.

10. Consider deferring payments to charity until next year as your donation will get relief at 30 per cent rather than 20 per cent - but if you do this, bear in mind the impact on the charity of delaying a contribution.

November 11, 2009 10:49am in Investments, Tax | Comment