This increase in income tax allowances could mean that all those earning up to £37,400 could have their tax-free personal income tax allowance increased by 15.4%, from £6,475 to £7,475.

The income tax allowance move, which was announced by BBC News this morning, should be welcomed by lower earners but may be offset by anticipated tax increases or budget changes in other areas, such as Capital Gains Tax, which is expected to more than double from 18% to around 40%, and would apply mainly to gains from selling a second property or to income from stocks and shares, but is also payable by those who gift their home to their children as well.

For further information on June 2010 budget changes, Income Tax, the personal Income Tax allowance and other tax allowances, and government cuts watch this space as we follow the Chancellor’s budget speech and report back to you.

The new tax year, which began on 6th April 2010, offers a golden opportunity for tax savings. Make use of your brand new tax allowances to fine-tune your financial planning, and minimise tax. Our checklist below highlights some of the main areas you can benefit. If at any point you have any questions, please call one of our friendly advisers on 0800 678 5929 or request financial advice here

ISAs 

The new ISA allowances went live on April 6th, providing for £10,200 in tax-sheltered savings this year (until April 2011). Savings currently sitting in a bank or building society account, and liable for tax on growth, can be put beyond the reach of the taxman by investing them in an ISA right now. If you do not use your ISA allowances, you are probably paying unnecessary tax! ISAs come in two variants, the Cash ISA, which combines the security of a bank account with tax-free savings growth, and the Stocks and Shares ISA, which invests in the stock markets and is therefore more suitable for longer-term savings, over 10 years or more.

Pensions

The start of a new tax year is an ideal time to review your pension savings. Pensions contributions are an excellent way to put money away for your retirement. What other savings option tops up your savings cash with 20% in tax relief, on day one? The taxman will even give relief of 40%, if you are a higher rate taxpayer.  However, you need to have a pension plan, to cash in on the taxman’s generosity here. Time is a crucial factor. If you do not already have a pension set up, it makes sense to do so right away. When saving in a pension, long-term exposure to the stock markets is the key to growing your cash. It really is that first pound, which earns the most for you. Use our online pension planner to check or plan your pension savings now.

Capital Gains Tax (CGT)

Capital Gains Tax (CGT) is a tax on the profit or gain you make when you sell, dispose of, or are compensated for an asset. That asset might be a buy-to-let property, a stocks and shares investment, or gains from an insurance payout when an asset is destroyed. Some assets are exempt from Capital Gains Tax, such as your car, personal possessions disposed of for £6,000 or less, and, usually, your main home. You have a personal Capital Gains Tax (CGT) allowance of £10,100, which can double to £20,200 if you are a couple. Capital Gains Tax (CGT) savings can also be made when you have made a loss on investments, by carrying those losses forward to offset them against profits in the future. Find out more by speaking to one of our advisers on 0800 678 5929.

Venture Capital Trusts (VCTs) & Enterprise Investment Schemes (EISs) 

A Venture Capital Trust  or VCT allows investments of up to £200,000 per year which attract tax relief of 30% on the investment, subject to the amount of tax you pay in that year (i.e. you can only reclaim tax you have already paid). A VCT is a listed company, and you must hold your shares in the VCT for 5 years, in order to retain your 30% tax relief. A Venture Capital Trust (VCT) invests in small and medium-sized UK companies with up to 250 employees, and market capitalisation of up to £15m. These companies are turning more and more to Venture Capital Trusts (VCTs) for finance as banks are not lending freely at present, and as a result the quality of projects in which VCTs are investing has never been higher. This assists forward-thinking and innovative VCT providers such as Octopus to offer VCTs which are planned in such a way that they have meaningfully minimised risk. Enterprise Investment Schemes are similar to VCTs, in that they also offer tax relief , though in this case at 20%. However you only need to keep your investment in an Enterprise Investment Scheme (EIS) for 3 years to keep the tax rebate permanently. 
If you think these options could benefit you, why not speak to us on 0800 678 5929?

Inheritance Tax (IHT)

You can give away gifts worth up to £3,000 in each tax year, and these gifts will be exempt from Inheritance Tax when you die. You can carry forward any unused part of the £3,000 exemption to the following year, but if you don’t use it in that year, the carried-over exemption expires. On wealth that falls liable to Inheritance Tax (IHT), tax is due at 40%. However, with good financial planning, an IHT liability can often be vastly reduced or eliminated altogether.

Don’t leave it until the last minute

All of the above are easy to set up and we have advisers who can help answer any questions you might have. We believe it is best to organise your finances at the start of the tax year, to get the full benefit. If you have any questions, please call us on 0800 678 5929 or make a financial advice enquiry here.

Her Majesty’s Revenue Commissioners is seeking to obtain a computer disk stolen from a Swiss bank with the names of 1,500 account holders who may be using Switzerland as a tax haven.

The disk was first offered to the German government by an informant in Switzerland, and the Germans have already received approval from lawyers to purchase the data, in the interests of personal tax investigations.

HMRC would be entitled to bid for the disk, as it may, under UK law, pay for information that may lead to the investigation, identification and prosecution of tax evaders. HMRC hopes to sift the data on the disk to zone in on British holders of Swiss bank accounts.

The disk has also attracted the interest of the Dutch, Belgian and Austrian tax authorities, who wish to monitor the possible avoidance of personal taxes by their own nationals.

Switzerland’s reputation as a tax haven is reinforced by the measures it takes to reassure its banking clientele that their money is safe, from real as well as online invaders. Barbed wire trellises seal all Swiss borders, and multiple rows of manhole shafts criss-cross all border roads, designed to be filled with explosives at the first hint of invasion.

This latest security breach is certain to unsettle those avoiding personal tax by using Swiss banks. It will also remind Swiss bankers of the dangers of capital flight,  as summed up by their own centuries-old mantra: ‘Money is as timid as a deer’ (‘Das Geld ist ein scheues Reh’).

In such situations, problems arise when a taxpayer acts (or refrains from acting) based on undocumented telephone advice, or on their recollection of what HMRC said, according to the Low Incomes Tax Reform Group (LITRG).

It is therefore important to complement direct advice from the Revenue with independent financial advice from a competent financial or taxation expert, said the LITRG.

 “This can become an acute problem for the caller who does not have a professional representative with whom to double-check  information and advice they receive from HMRC,” said the LITRG.

This has been proven in recent cases where taxpayers have made a legal challenge to decisions made by HMRC. The clear message from the courts is that taxpayers must have put their question to HMRC in writing, with a clear indication that they are seeking a considered opinion on which they may rely.

As a minimum, taxpayers communicating directly with HMRC should record the date and time of their call, the name of the officer they spoke to, and the details of what was said, particularly from the HMRC side. If the call is made from a landline, taxpayers should also retain their itemised phone bill to prove that the call took place.

In the event of disputes, taxpayers can make a ‘Subject Access Request’, known as an SAR, from the HMRC Data Protection Unit, to receive a CD copy of telephone conversations made between certain dates.

The new ‘eco-tax’ would aim to vastly reduce the amount of plastic in circulation, by imposing a charge on the use of plastic carrier bags in shops and supermarkets. 

Despite a fall of a quarter in the use of plastic bags over the past 2 years, 10bn bags are still distributed each year in supermarkets, according to the website AbolishPlasticBags. 

On November 25^th, the London Councils’ ‘Ban the Bag’ campaign withdrew its London Shopping Bag Bill from parliament in return for the new government undertaking. A government action would be more effective than the local London initiative, because it will be nationwide. 

Wales has already taken its own tax initiative on plastic bags with a 15p per bag charge to be introduced in early 2011. 

Ireland was first to ‘bin the bags’ back in 2002, when a 22c charge on supermarket bags cut consumption by 94% in just a few weeks. 

The UK government has pledged to introduce a formal tax if voluntary initiatives by retailers fail to vastly reduce the amount of packaging in circulation.

Reducing plastic use is viewed as a major contribution to environmental renewal, as plastic bags take up to 1,000 years to degrade. 

Retailers such as Tesco are already encouraging the re-use of bags by selling their ‘Bag for Life’ heavy duty plastic bags for 10p, and promising to replace them free of charge when they are worn out. 

In the US, local plastic bag taxes are already working well in San Francisco, with Washington planning to introduce a 5c tax in January.

Are you one of the 33m* people in the UK who could reduce your personal tax bill?

Here are five ways to help you with efficient tax planning.

Move savings into tax efficient ISAs

The Individual Savings Account (ISA) is a tax efficient savings product that comes in two variations, the cash ISA and the stocks and shares ISA. The cash ISA provides an opportunity for totally tax-free savings. In the stocks and shares ISA, a small amount of tax is taken by government but the product is still tax-advantaged. The total you may save into ISAs is currently £7,200 per year (unless you are over 50, in which case it is £10,200). From April 2010, the ISA allowances increase, and everyone may save up to £10,200 per year into their ISAs.

Use your personal tax allowances 

In the case of a couple where one person is a non-taxpayer, you can save on tax by placing savings accounts in the name of the non-taxpayer, who can then receive the interest, up to their personal tax allowance of £6,475 per year, tax-free. 

Plan ahead to avoid Inheritance Tax

You can work now to avoid Inheritance Tax (IHT) later, by passing money to your children in such a way that no IHT liability arises. A person may make a large loan to their child, for instance £100,000 to buy a house, and then write that loan off at up to £3,000 per year (£6,000 for a couple), thus avoiding an IHT liability.

Write your insurance policies in trust

By writing an insurance policy in trust when it is originally set up, you effectively remove that insurance cover from your estate, and thus reduce the value of your estate for IHT purposes. Writing an insurance policy in trust is a simple matter, but is worth doing, when you consider that an insurance policy for £200,000 could be subject to £80,000 in Inheritance Tax! 

Use Salary Sacrifice

A salary sacrifice is an arrangement you make with your employer which can help you cut your income tax bill. With salary sacrifice, you give up a portion of your salary, taking instead a non-cash benefit, such as an employer contribution to your pension fund. Although your cash in hand at the end of the month is less, your pension is boosted and attracts tax relief on the contributions which means that your total remuneration actually increases. 

*Research conducted by Fidelity International, September 2009

“A journey of a thousand miles starts with a single step.” (Mao Tse-tung (Zedong), 1893-1976
Don’t knock ‘eco gestures’ – on the long journey toward practical solutions on climate change we need to begin with small steps in our daily lives. Starting with small steps by changing attitudes to climate change, we will get there.

The underlying message in Professor David MacKay’s lauded book “Sustainable Energy – without the hot air” would beg to differ. He suggests that to make the sweeping changes we need to tackle the imbalance in energy demand and supply, in a sustainable way, we might as well forget our little “eco gestures”. They won’t make much of a difference, so don’t sweat the small stuff.

His view, that focus on inadequate actions is not enough for real change, may be true, but this doesn’t negate the positive actions people seem to be making by thinking about energy. We at Principle First believe nurturing an ethos of energy conservation can permeate your daily life, your household and the people around you. Get into the habit of considering your energy use, and you start to ask other questions. How much energy do I use? How much money am I wasting? Where is my energy coming from? Where will it come from once fossil fuels deplete? If we can get tax payers asking these questions, we can eventually get them thinking of the radical changes Prof. MacKay discusses in his book. And more importantly, if we get people thinking in this way, as taxpayers, we can eventually implement the radical changes needed by moving the debate on future energy sources to a point where they become a genuine political issue.

Prof. MacKay criticises the BBC for their campaign’s focus on insignificant eco gestures. By undermining our “eco gestures”  Prof. MacKay dismisses the fact that people are getting the message about climate change. The idea that national campaigns are thought provoking alone justifies their presence. There are many people who couldn’t care less about climate change. There are also many people who haven’t the first clue about climate change. Campaigns educate the public, even if their focus is askew.

The key is effective communication that energy conservation and less unnecessary demand is needed. Campaigns may not be focused on the right or most effective solutions but the fact people are becoming more informed on energy and climate change is valuable. If there are calls for people to make a concerted effort towards sweeping change, we need the public’s behaviour to change and these habit forming gestures are the first steps in the right direction.

Surely the fact that people are listening to advice from the likes of the BBC, should be celebrated, not ridiculed. Knowing that you could just as easily recycle something rather than sending it to landfill is one thing, but actually getting into the habit of recycling and separating waste is what will make the difference. In this situation, the same is true; having the knowledge that you are wasting energy and haemorrhaging money at the same time is one thing, but actually getting into the habit of consciously thinking about the issue, and taking measures to reduce your waste is what will make the difference – such as, turning off your phone chargers. However insignificant Prof. MacKay may think unplugging chargers is, it is still a valuable asset in getting people to think about energy and getting into a good practice of conserving it.

Is the public being asked to do too much?
No. Radical change is what is needed for real, effective change. Turning off chargers won’t get us where we need to be alone. Psychologically though, people are more aware of what is needed and habits are forming. What is needed is more education on what real gestures will make a bigger difference. People are prepared to make changes; the message has been delivered and chargers are being turned off. Give them the right information, encourage the fact that people are making a conscious effort to consider energy and make changes, and we could get where we need to be.

For effective suggestions download Professor David MacKay’s book “Sustainable Energy – without hot air” here: http://www.withouthotair.com/download.html

These are the findings of the UK Sustainable Investment and Finance Association (UKSIF) published this week for National Ethical Investment Week.

However, investors remain sceptical on the subject of how ethical so-called ethical investments really are, with 44% claiming that the financial services industry needs to provide clearer evidence of the green impacts of ethical funds.

As a result, only 8% of UK investors currently hold an ethical investment or savings product.

Those surveyed* favour using their investment funds to make a positive impact close to home, with 54% of respondents claiming renewable energy and 52% opting for waste reduction as their priority.

Independent ethical research specialist EIRiS reveals there is currently £7bn invested in ethical funds in the UK, compared to £1.5bn ten years ago.

Meanwhile the Investment Management Association noted that the ethical sector is showing explosive growth, with a threefold increase in quarterly net sales of ethical funds, to £59m.

Interest in ethical issues and investments is expected to gather further momentum, with the approach of the Copenhagen Climate Change Summit next month.

*2092 UK adults surveyed by YouGov plc for UKSIF, October 2009