December 2010, a time for giving….and snowing!

Finally December 2010 has arrived. The shops have been anticipating Christmas for some weeks now, but few expected the snow falls that most have seen at the end of November and the very early days of December.

November is a busy month for the team at Churchouse Financial Planning and 2010 has been no exception. With many seeing December as a deadline, they have focussed on finalising many aspects of their financial planning, from pension contributions, ISA investments, Capital Gains Tax, IHT (Inheritance tax planning) and, in line with this, the use of their annual allowances in time for Christmas.

It is this last point that I wanted to focus on in this blog. For many, the next month will be a time for family and for giving. Some like to sprinkle in some tax efficiency into this mix by gifting away their annual gift allowance of £3,000 in the tax year. This limit is per donor and if you did not use last year’s allowance, you can go back on year and gift this away at the same time, making your total gift £6,000 (for that first gifting year). If you are married/in a partnership, and in a position to gift away significant fund, both spouses/partners can undertake this process and gift away a total of £12,000 between the two of them (providing it was not used last year). Some find that the end of December is a focal point for them achieving this planning. This places the gifted proceeds outside your estate for inheritance tax purposes from the date the gift is made. You should check this with your independent financial adviser or accountant before proceeding.

I would normally recommend that if you were to consider this type of gifting, you might want to ensure the recipient has some documentation to confirm why this gift is being made and we can help you with this.

Taking this a stage further, after making these gifts, some still have surplus to gift away and another allowance that can be employed is the use of the ‘Surplus Income’ allowance. This is a more complicated process than the normal gift allowance and may need a regular gifting pattern to make it viable. You should take advice from an independent financial adviser (IFA) on this issue to see if this is achievable, if you want it to be.

As the snow thaws over the coming few days, you may want to have look at these allowances to see if they could be useful to you and your family in the coming weeks.

We hope that you have a great festive season and look forward to helping you with your financial planning in 2011.

This article should not be treated as individual advice. Individual advice is only available based on your individual circumstances. Further information, advice and contact details are available at our websites, www.churchouse.com or www.planmypension.co.uk

Keith Churchouse, Director of Churchouse Financial Planning Limited, Chartered Financial Planner.

Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority.

www.planmypension.co.uk is a trading name/style of Churchouse Financial Planning Limited. CHURCHOUSE is a trademark of Churchouse Financial Planning Limited.