Most of us do some sort of savings. While the interest being offered on cash savings accounts is very low, it will be at least 20% more if your money is building up free of tax. Those who are earning £6000 or so can fill out a simple form to ensure tax is not deducted. For most of us, however, avoiding tax on our savings comes down to putting the money in a Cash ISA (Individual Savings Account). Cash ISAs are easy to arrange. Each individual can save up to £5,100.00 in a Cash ISA in this Tax Year (2010/2011). This is expected to increase in the new Tax Year to £5,340.00.

While looking at your cash savings to avoid having to pay tax, it is a good time to do an equally important action. Find out what interest you are being paid! Usually you will need to ask. Once you know you can then do a quick comparison (moneyfacts.co.uk or moneysupermarket.com) to see how much better you could do elsewhere. At the very least you can find out from your present bank or building society whether they have a higher interest rate they can offer you.

The Stock Markets generally have gone up over the past 12 months. If you have money invested in stocks and shares, you may well be showing a profit on your investment. Each year you can realise a level of profits on such investments without paying any tax. In this Tax Year it is £10,100. So if you cash in your investments that have made a total profit of £10,100, you will come away with a useful tax-free return. And since it is true for all adults, a husband and wife could come away with £20,200 tax free! And a clever couple who have made substantial profits could get the £20,200 tax free before the 5^th of April and then get the same on the 6^th of April. That is a total tax-free income of £40,400.

If you have made profits on some investment higher than that, then you will still pay less than you would pay in income tax. A basic rate taxpayer would be charged at 18% and a higher rate taxpayer at 28%. It is important to get some advice on this in order to avoid paying more than you need to. You can also straddle the old and new tax years, to minimise the tax. If a husband and wife are in different tax brackets, e.g. one with a part-time job and the other a higher rate taxpayer, there are various strategies that you can use to reduce your tax. For example, if the lower earning spouse is earning less than the tax threshold (£6,475.00) in the current tax year, then any savings could be put in her sole name to avoid tax.

In this Tax Year you can earn £6,475.00 before you pay any tax. You can earn a further £37,400 and pay only 20% tax. So you would need to earn in excess of £43,875 before you start being charged the 40% tax. In the new tax year the £6,475.00 threshold is being increased to £7,475.00. However, the amount you can earn above that before you pay 40% tax is being reduced to £35,000. So in the new tax year, those earning over £42,475.00 will be paying 40% tax.

High earners – Once you are in the higher rate tax bracket the importance of tax planning becomes greater and greater, the more you earn. The use of pension contributions, or "pension sacrifice" can often save you paying quite a bit less tax. Those earning £100,00 and more have the greatest challenges and opportunities. If you are in this category, do contact us for some advice about your options.

For many people even the mention of the word "pension" starts them yawning or moving on to some other subject. Part of the problem is that the laws on pensions have been continually changing over the years. We are here to assist you to know what you have and what that will provide you. With the experts forecasting that we will all start living to our 90s or even longer, the importance of have a worthwhile source of income in retirement is obviously vital.

If you are single, if you had an accident and died, any value of your home and possessions over £325,000 would be taxed at 40%. For a married couple they each receive this £325,000 so there is a total of £650,000 protected from the 40% Inheritance Tax. If you have a lot more than you need, you may wish to look at gifting some of your money away year by year in order to reduce the eventual Inheritance Tax. If you are in that category, we would be happy to discuss the various strategies that are open to you.

If an increase in your mortgage payment would make things difficult for you, we would recommend that you look at taking out a new fixed-rate mortgage. As it becomes more and more inevitable that the Bank of England is going to have to start raising its rate, the level of the fixed rates will climb. So better now than later is a good watchword. We would be happy to assist you to find out what options are open to you.

If you are reaching that point where you want to take your pension benefits, do contact us. As independent financial advisers, we can assist you at looking at all your options – annuities, drawdown pensions, short-term annuities, etc.