Gains and losses

Up to the 1998 Budget, it was common to "bed and breakfast" shares just before the end of the tax year, in order to take advantage of the annual tax-free allowance for CGT. This was outlawed at the end of 1997/98, but it is still possible to achieve the same result (at the cost of more stockbroker's commission) by switching to a different investment. On a substantial portfolio and over a period of years, this can save a great deal of tax.

People in business who are over 50 are losing the benefit of "retirement relief" on the disposal of their companies or firms. The amount of relief is being reduced each 6 April until 6 April 2003, when the relief will disappear altogether. It is possible for someone who is already over 50 to "lock in" the relief they are already entitled to, without actually finally disposing of the business. But the relief is likely to be greater if action is taken before the next 6 April.

On the other hand, the new "taper relief" which was introduced to replace the old inflation allowance goes up for those assets which have been held since before 1998 on 6 April each year. If you are thinking of realising some investments, it may be best to wait until then - and you'll pay any tax a whole year later, as well.

Actionpoint:

HAVE YOU USED YOUR 1999/ 2000 ALLOWANCE? ARE YOU ENTITLED TO RETIREMENT RELIEF?

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