Tax-free investments

In 2009/10 the capital gains tax annual exemption is £10,100. If you can structure your financial affairs to give you gains each year that do not exceed this figure, you effectively have extra tax-free income. Investments giving rise to gains are most frequently unit trusts and shares, although those held in ISAs and investments in government gilts don't have any capital gains liability.

While most people accept that investments of this type can go down as well as up, if you make investments through an authorised adviser and you suffer a loss because of poor advice, poor investment management or the adviser going out of business, there is a Financial Services Compensation Scheme, which can pay compensation of up to £48,000 - for more information, visit its website at www.fscs.org.uk.

Transfers between spouses

Assets transferred between spouses are exempt and each spouse is entitled to the same exempt amount of £10,100 (2009/10 figure).

If you will have to pay tax, consider transferring the asset to the non-taxpaying (or lower-rate taxpaying) spouse.

Transfers between spouses followed by a sale could be attacked by the Revenue as an anti-avoidance measure, so there should be a delay between the transfer and the subsequent sale. There should be no strings attached to the gift whatsoever, particularly something which might result in the eventual proceeds going back to the transferor.

Law stated as at 1 August 2009