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Year End Tax Review 2005


Contents

Don't leave it to chance

Family tax planning

Tax payback - tax credits

Pay rise for the other half?

Jam today, or jam tomorrow?

Pension payments and tax relief

Employee pensions

Children's pensions?

Borrowings and tax

Investment limits

Employee cars and fuel

Give generously and save tax

Capital gains

Capital losses

Second homes

Company or trade?

Inheritance tax

Children's savings?

Business tax

Two jobs = too much NIC?

Should VAT be flat?

Mutiny and bounty

One careful owner

A matter of trust

Children's savings?


If a parent gives something to a child under the age of 18, the parent remains taxable on income if it is more than £100 a year. So you cannot enjoy the benefit of the child's personal allowances by putting investments or deposits in their names.

There is no similar rule for gifts from grandparents. Of course, the Revenue might be upset if a parent gave money to a grandparent to give to a child, but a genuine and straightforward gift from a grandparent, which does not originally come from the parent, can be put into a bank account for a child and no tax needs to be paid on the interest (as long as it is less than the child's allowances).

In 2003, the Chancellor announced a new scheme to award children a "trust fund" at birth. This will apply to anyone born from September 2002 onwards, and will establish a savings account with £250 to start with. The money cannot be touched until the child is 18. The accounts are supposed to come into full operation until April 2005, and if you have a child who will qualify, you may find that this becomes something that you can add to (up to £1,200 a year) in a tax-efficient way.

Action Point!
What's the best way to build up savings for the children?