Year End Tax Review 2009/2010 Contents Lead articles The year ahead... This year, next year Pension hit Employees Too much NIC NIC and pensions Company cars Tax-free benefits Business - General Time to incorporate? His and hers Family bonus Profit and loss Show me the money Can't pay, won't pay? Turning back the clock Business - VAT Standard VAT or flat VAT? VAT goes down - must come up? European revolution A good start for VAT Happy returns? Investments Top-up savings Rainy day money Capital Gains Gains favoured Splitting gains A place in the country Holiday lets end Families Family fortunes Where there's a Will Credits and debits Piggy banks Still trustworthy? Administration Penalty shoot-out Paperwork, paperwork Pay tax later Opportunity knocks again Charity Give and save Non-Domiciled People Home and away Interest Interesting times

This year, next year Income is "cut up" into fiscal years to decide whether you are a higher rate taxpayer or not. Someone who goes over the limit one year and has nothing the next pays much more tax than someone with a steady, level income. If your income might fluctuate, it is worth looking at ways to advance or delay the charge on that income in order to even out the tax rates. Of course, if the tax charge is going to be the same in either year, then most people would rather pay the tax later - if you receive some types of income on 6 April rather than 5 April, you may pay the tax on it a whole year later. The big changes on 6 April 2010 affect: people with income of £100,000 a year - they start to lose the benefit of their tax-free personal allowances; people with income of £150,000 a year - they will pay income tax at a top rate of 50%. If you are affected by that, it will be worth moving income forward to beat these increases - paying 40% now is better than paying 50% in 12 months. Income that can be moved from year to year easily includes: salary (although PAYE means that the payment of the tax cannot be delayed for a whole year); dividends from family companies; distributions from discretionary trusts; tax charges on cashing in some life insurance policies. If the tax rate is going to be the same - 40% in either year, say - then it may be worth moving income a few days later so that the tax is payable a whole year later. It is also possible to claim reliefs for some types of payment in particular years to make sure that they reduce income taxable at the highest rate. These include pension contributions and charitable donations. There are special rules about extra pension contributions at the moment (see the item "Pension hit"), but if you are thinking of giving money to charity and you earn a little over £100,000, it might be better to wait until 6 April 2010 before being generous - you might preserve some of the tax-free allowances which will otherwise be withdrawn. Mr Darling has also announced increases in National Insurance, but those won't hit until 6 April 2011. Thinking about moving income will be important again next year. Action Point! Consider moving income or reliefs around 5 April