SWEEPING changes in the tax regime come into effect at the end of the tax year in April.

In particular, the changes affect capital gains, but by planning early it is possible to take advantage of the tax saving opportunities which are available for both individuals and their businesses.

Jeremy Clarke-Morris at business advisers and chartered accountants Kendall Wadley in Worcester has put together a list of the main planning issues which may save you and your business money if you take action before Saturday, April 5.

He said: "With regard to income tax, each individual can receive income of up to £5,225 during 2007/08 without incurring a liability to income tax. For income above this level, tax will be payable at 22 per cent unless your income exceeds £34,600, at which stage higher rate tax of 40 per cent is payable."

Mr Clarke-Morris suggests that people should either consider redistributing income-producing assets between husband and wife or consider the timing of income before April 5.

Alternatively, they could make a donation to charity through the Gift Aid scheme. If you are a basic rate taxpayer this will have no effect on your overall position because donations are made net of basic rate tax. However, higher rate payers will be able to obtain an additional 18 per cent tax relief.

Mr Clake Morris said: "If you have savings and investments, gains and most income in individual savings accounts (ISAs) are tax free and are ideal for saving small amounts on a regular basis.

You have until April 5 to make your 2007/08 ISA investment and the maximum annual deposit is £7,000 overall, of which no more than £3,000 can be in cash."

The next tax year, 2008/09, sees the introduction of significant changes to the ISA regime, which include making ISAs available indefinitely.

The 2008/09 allowance will be increased to £7,200, of which £3,600 can be invested in a cash ISA.

Mr Clarke-Morris said "Most individuals can make pension contributions of up to £3,600 gross per annum and obtain tax relief on them, even if they are not taxpayers. This reduces the actual cost to only £2,808 for basic rate taxpayers and further relief is available to higher rate payers. As well as improving your own financial position, this could be used to establish savings for children or for a non-earning spouse."

In relation to capital gains tax, if you hold shares which will be sold at a profit, consider selling them to utilise your annual CGT exemption, which is currently £9,200 (if unused it cannot be carried forward). Gains exceeding the annual exemption are taxed at either 20 per cent or 40 per cent, dependent on the level of your other income.

"It may be that assets will be sold at a loss and if other gains exceed your annual exemption, then the loss can be used to offset against these."

In his pre-budget report, the Chancellor Alistair Darling announced sweeping changes to the way capital gains will be taxed. From Sunday, April 6, a flat rate of 18 per cent will apply and taper relief will be abolished.

Mr Clarke-Morris said: "Taper relief is a valuable deduction and can exempt 75 per cent of any gain made on business assets after only two years of ownership. If you are considering selling a business asset, the timing of such a disposal needs careful consideration as delaying until after April 5 could see an 80 per cent increase in your tax bill. Act now to benefit from the generous 75 per cent rate of business asset taper relief.

"As a family company, if the payment of bonuses to directors or dividends to shareholders is under consideration, give careful thought as to whether payment should be made before or after the end of the tax year. The date of payment will affect the date tax is due and possibly the rate at which it is payable.

"Remember that any bonuses must be paid within nine months of the company's year end to ensure tax relief for the company in that period.

"Under the capital allowances scheme, your business can obtain tax deductions for depreciation and losses on the disposal of assets used in the business. This may include cars, plant, machinery and equipment.

"The rate of the allowances will depend on the nature of the asset, and the size of your business. The timing of the relief will also depend on the date the expenditure is incurred.

"If you make a purchase just before the end of the current accounting year, the allowances will usually be available a year earlier than if the purchase is made just after the year end. In the same way, the disposal of an asset may trigger an earlier claim for relief or even an additional charge to tax."

For further advice on end-of-year tax planning opportunities for you and your business contact Mr Clarke-Morris on 01684 892666 or e-mail jcm@kwca.co.uk