The current economic turmoil has meant that many of the significant changes that appeared in Mr Darling’s budget have not hit home with the same force as might usually have been expected.

Those affected by the significant tax rises for higher earners have been slower than normal in asking what they can do to reduce the impact of the changes.

Briefly the three most significant announcements were: • From April 2010, the marginal rate of income tax for people earning between £100,000 and £112,950 is now 60%.

This is due to the loss of the personal allowance at that level.

• The top rate of income tax on earnings over £150,000 is rising from 40% to 50%.

• For those earning more than £150,000, pension contributions (including those from your employer) above £20,000 will receive tax relief at 20% not 40%.

As the Director of CLA Independent Financial Planners, I would like to offer a few tips on things to consider.

Where possible, make sure your savings and investments are structured to avoid paying unnecessary income tax. The obvious start point is investments into Individual Savings Accounts. The limit is being raised to £10,200 from April 2010 (or this October if you are over 50) – make sure you use it.

Consider investments such as Venture Capital Trusts and Enterprise Investment Schemes which give significant tax benefits – these should be considered as elements of your investment portfolios. Offshore bonds create an opportunity to take control when you receive income – if you believe you will be earning less in the future, or you think tax rates will come down at a future point – try to use a structure which avoids the need to pay income tax at high rates.

Look to use investments which create capital gains (subject to 18% tax) rather than income (subject to up to 40% or even 50% tax).

Saving for your retirement through contributions to a pension policy has always been regarded as the most tax efficient route. You will have been getting tax relief at your highest rate which means that, even though you pay income tax on the resulting pension income, the maths works out. The recent cap on the size of contributions which attract relief at your highest rates makes other investment routes look much more attractive.

CLA SW is holding a series of financial planning updates with CLA Independent Financial Planners, where information will be presented in a jargon free way in some wonderful locations. The events will take place on the following dates: • 13 October at Maunsel House, Somerset; • 14 October at Boconnoc House, Cornwall; • 28th October – Inwood, Somerset/Dorset border; • 24th November – Charingworth Manor Hotel, Gloucestershire.

ROGER HALLE, CLA Independent Financial Planners Tel: 0115 988 6993 E-mail: financialplanners@cla.org.uk