End of tax year - small business checklist

Tenon, the accountancy firm and business advisers to owner-managed and private businesses, have urged small businesses to ensure they are making the most of available tax allowances prior to the end of the tax year on 5th April 2008. This checklist was originally provided by Andrew Hubbard, Director of Taxation at Tenon and updated for the 5th April 2008 tax year by the Bytestart team.

1) Review your investment portfolio

The annual capital gains tax exemption of £9,200 must be used before 6th April 2008.

• Step 1: Review your investment portfolio to see whether or not there are shares standing at a gain broadly equal to the annual exemption.
• Step 2: If there are, consider selling some of them and buying them back though an ISA. Alternatively, your spouse could buy them back.
• Result: Either way you should end up with an uplifted base cost. (Note you can't simply transfer shares to your spouse to benefit from this uplift. You have to sell them in the market and your spouse must then buy them back in from the market).

• Step 1: If you are a basic rate taxpayer this year but are likely to pay tax at the higher rate next year consider closing your bank and building society accounts before 6 April 2008 and opening new accounts.
• Result: You will receive interest to the date of closure. This will be taxable in this tax year and you will only be subject to basic rate tax. (Be careful that the amount of interest you receive does not tip you into the higher-rate band this year).

You have an annual exemption on capital gifts of £3,000, which can be carried forward one year before it is lost.

• Step 1: If you have not made any gifts of capital this year or last year, make a gift of £6,000 before 6th April 2008.
• Result: This gift will be entirely free of Inheritance Tax.