Year End Tax Review 2007 Contents A word to the wise Employee pensions A matter of trust Pension policies Family tax planning Mr and Mrs Inheritance tax Employee cars and fuel Borrowings and tax Tax-free perks Two jobs = too much NIC? Give generously and save tax Children's savings? Company or trade? Capital gains Business tax Investment limits Should VAT be flat?

Pension policies Pension policies had a rocky press in the early years of this decade - Equitable Life and Stock Market losses - but many people still use the attractive tax relief for pension contributions to help them provide for retirement. If you put £1,000 into stocks by paying only £600, you are already ahead of the game! The whole system for tax relief on pension schemes changed on 6 April 2006 ("A-day"). The biggest effect will be felt by: those with very large pension funds; people who have low current earnings but used to be able to pay contributions because they had higher earnings in the last five years. These people should take advice as soon as possible if they have not already done so. But everyone with a pension fund will be affected, because the new rules will apply to pre-existing schemes as well as new investment. So it will be worth reviewing your pension provision in more detail than normal this year. The basic rules for most ordinary policyholders remain much the same, with a few detailed changes. You get tax relief on pension contributions as you pay them - the rules on "carrying back to an earlier year" have finally gone. You now pay contributions on all types of policy net of basic rate tax relief, and the government pays the other 22% into your policy. You are still saving up to receive a tax-free lump sum of up to 25% of the fund on or before your 75th birthday and a taxable income after that.It would be nice to get all the tax relief and then have access to 100% of the money in cash, but sadly they still won't allow that. One of the big changes is that you can now get tax relief on up to 100% of your current earnings, instead of a percentage which varied with age. So you can make the whole of your tax liability for the year disappear. Of course, you need something to live on, but if you have a cash windfall - say a legacy - bumping up your pension fund might be something to think about. Action Point! Review pension plans but don't rush in