Ten ways to prepare for the tax deadline

EACH week The Scotsman gives you a top ten guide to pertinent financial issues. With just weeks until the end of the 2009-10 tax year, time is running out to capitalise on any tax breaks and allowances to which you're entitled.

Karen Peterkin, financial adviser at Chiene Tait Financial Services in Edinburgh, offers her top tips on making full use of any tax advantages on offer.

1 MAKE ALLOWANCES As of 6 April, the current level of personal allowance (6,475 for 2009-10) will be tapered down to zero for those earning over 100,000 a year. The reduction will be 1 for every 2 of income over 100,000, resulting in the personal allowance being eliminated at an income level of 112,950. Therefore, a marginal rate of income tax of 60 per cent will be applied to the band of earnings of 12,950 above 100,000.

2 MAXIMISE YOUR PENSION CONTRIBUTIONSReview your pension contributions to see if a special annual allowance applies to you for 2009-10 and 2010-11. Consider the possibility of making salary sacrifice arrangements to maximise your annual pension contributions and avoid losing your personal allowance.

3 INVEST IN AN ISAYou can invest up to 7,200 into an individual savings account (Isa) each tax year. Up to 3,600 of this can be placed in cash, either with the same or a different provider. Over-50s can invest up to 10,200 a year into an Isa, with up to 5,100 in cash. From 6 April, the higher contribution limit applies to all.

4 SPREAD YOUR INCOMEFrom 6 April, higher rate taxpayers will be taxed at 50 per cent on income above 150,000 (excluding dividends). Dividends will instead be taxed at a new rate of 42.5 per cent. Consider spreading your income to other entities such as companies or spouses with lower incomes.

5 MAKE A GIFT Gift income producing assets to your spouse or civil partner. It is still possible to do this on a no gain/no loss basis, as long as the gift is outright. Tax savings will be achieved if the person you are gifting to has a marginal rate of tax lower than your own. Consider restructuring your investment portfolio to put in place tax deferral wrappers, subject to capital gains tax plans.

6 CONSIDER EARLY RETIREMENT If you are aged between 50 and 55 you may want to look at your pension options, even if you are still working. From 6 April, the age at which you can access your pension is rising from 50 to 55. Therefore if you have just turned 50, you will have to wait a further five years after 6 April to access pensions and/or tax-free cash.

7 CHILD'S PENSION You can contribute up to 3,600 gross (2,880 net) in each tax year to a stakeholder pension for a grandchild. For example, if a grandparent contributes the maximum in each tax year for 18 years, the fund could be worth around 1 million (based on Standard Life projections) when the grandchild reaches age 55. This is based on a growth rate of approximately 6 per cent.

8 REVIEW YOUR INVESTMENT BONDS If you are thinking of surrendering these soon, do so before 5 April. You may incur a gain chargeable to income tax on surrender and if this takes your income above 150,000, you will incur the higher tax charge of 50 per cent on the excess. However, it may also be possible to assign a bond to another person, who may not incur such a high level of tax charge on surrender.

9 CHECK YOUR BENEFITS Review any benefits-in-kind to see if these can be minimised. Again, if you are a higher rate taxpayer, you may want to make sure that your taxable income does not exceed 150,000.

10 DEFER GIFT AID Put these payments off until after 5 April. If you are a higher rate taxpayer you can claim the difference between the higher rate of tax and the basic rate of tax on the total value of your gift aid donations. Therefore if you wait until after 5 April and you pay tax at 50 per cent, you will secure a higher rate of tax relief via your self-assessment tax return.