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

Give and save There are very generous tax reliefs for gifts of cash and gifts of quoted shares or land to charity. If you are thinking of making any gifts, it is worth thinking about doing so by 5 April in order to enjoy the tax relief in an earlier year. The relief on cash gifts works by reducing the donor's higher rate tax, and allowing the charity to reclaim the donor's basic rate tax already paid. If a 40% taxpayer gives £800 to charity, the charity claims back £200 (giving it £1,000 in total), and the donor claims back £200 (so the gift costs £600 net of the tax relief). After the 2008 cut in the basic rate of income tax, charities enjoy a small bonus on top of the £200 as well - up to 2010/2011, the charity will receive £1,025 rather than £1,000. The relief on quoted shares or land has two aspects. Any capital gain disappears and is not charged; and the whole value of the shares or land can be taken off the donor's taxable income for the year. If you have a portfolio with gains in, the shares with the biggest gain would be the most tax-efficient thing to give to charity. For example, a gift of shares worth £10,000 would produce an income tax refund for a 40% taxpayer of up to £4,000. If the shares had a gain of £6,000 in them, the CGT saving would be up to £1,080, so the charity would receive £10,000 for a cost of only about £4,920. The last few years have seen the introduction of "carry back gifts" (made in 2010/11 but given tax relief in 2009/10) and "giving a tax refund to charity" (directing the taxman to pay any refund on your tax return directly to a charity). It's not yet clear whether these are really beneficial to taxpayers, or are just gimmicks. Action Point! If you want to give to charity, have you shares with gains?