TAKING action before the end of the tax year on April 5 could save you money, writes Michael Proudfoot, Kendal-based partner at chartered accountants Lonsdale & Partners.

Married couples

Husbands and wives are taxed separately but may be in a position to reduce their aggregate liability by careful planning.

You should review the income split between spouses and consider transferring assets to even up incomes.

Income arising from jointly owned assets will be taxed 50/50 on each spouse unless a declaration is made to the Inland Revenue stating that the asset is owned in unequal shares.

If the husband or wife is self-employed, their spouse could be employed or taken into partnership as a means of redistributing income.

Care must be taken because the Inland Revenue may look at such situations to ensure they are commercially justified.

Taxpayers aged 65 or over should consider how to make full use of the available age allowance.

The higher allowances are progressively withdrawn once income exceeds £ 17,000.

This may be avoided by switching to non-taxable or capital growth-orientated investments.

Non-taxpayers

Anyone whose personal allowances exceed their income is not liable to tax.

Where income has suffered tax deduction at source, a repayment claim should be made.

In the case of a bank or building society, a declaration can be made by non-taxpayers to enable interest to be paid without deduction of tax.

Remember that tax credits on dividends can no longer be repaid - ensure non-taxpayers have other sources of income to utilise their personal allowances.

Family companies

If the payment of bonuses to directors or dividends to shareholders is contemplated, careful thought should be given as to whether payment should be made before or after the end of the tax year.

This will affect the date tax is due and possibly the rate at which it is payable.

This is an area which should be reviewed as a matter of urgency.

Remember that changes introduced in April, 2000, namely the new 10 per cent corporation tax starting rate and the extension of employers' NICs to all taxable benefits in kind may alter the picture.

Capital gains

The annual exemption for 200-01 is £7,200.

Note that a husband and wife both have their own annual exemption.

A transfer of assets between them may enable them both to use this fully.

Consider selling chargeable assets before April 5, 2001, to realise gains which utilise this exemption.

Bed and breakfasting (sale and repurchase) of shares is no longer effective, but there are two variants which are still effective:

l Sale by one spouse and repurchase by the other.

l Sale, followed by repurchase via an ISA.

If disposal is deferred until a date after April 5, 2001, then not only will next year's annual exemption be available but the tax payable will be due a whole year later.

If the asset is a business asset owned before April 6, 1998, additional taper relief will also be available.

The rate for a disposal in 2000-01 is 25 per cent and in 2001-02 it is 50 per cent - double the benefit.