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With less than three weeks to go until the end of the 2005/06 tax year on Wednesday, 5 April, now would be a great time to spring clean your finances. (Actually, I hesitate to use the phrase "spring clean" because of winter weather conditions. However, according to the Meteorological Office, spring begins on 1 March, rather than on the vernal equinox, which falls on 20/21 March!) Nevertheless, it's vital not to wait until the last moment to do your financial housekeeping. Otherwise, you're bound to leave it too late and miss out on valuable tax allowances and breaks! So, with plenty of time still remaining, here are a few things to sort out before the 2006/07 tax year begins on 6 April: 1. Keep an eye on the chancellor Gordon Brown will present his latest Budget on Wednesday, 22 March, setting out his plans for tax and public spending for the year ahead. Hence, the following day, it'd be a good move to work out how your personal financial situation has changed. To be honest, I'd watch out for more stealth taxes, as the government seeks ever more creative ways to fund its growing overdraft! 2. Grab your ISA allowance Let me clear up a popular misunderstanding: an Individual Savings Account (ISA) is not an investment in itself. In fact, it's simply a tax-free wrapper into inside which you put cash, bonds, individual shares or stock-market funds. By sheltering your investments inside an ISA, you don't have to pay tax on any income or capital gains that they make, which boosts your returns. If you're a hardcore saver who shuns the stock market, then a cash mini-ISA should be right up your street. This tax-free savings account allows you to stash £3,000 cash per tax year out of the taxman's reach. Hence, if a cash mini-ISA pays annual interest of, say, 5%, then that's what you'll earn, with no deduction. If you've filled up your cash ISA or fancy hedging your bets, you could also put up to £4,000 per tax year into a shares mini-ISA. Then again, if you're a big fan of stock-market investing, you can go the whole hog by giving mini-ISAs a miss and putting up to £7,000 a year into a shares maxi-ISA. Thanks to these beauties, a couple can invest £14,000 per tax year into shares, without losing a penny of their gains or dividends (the income paid by shares) to the taxman. Hurrah! Check out the terrific deals in the Fool's ISA centre! 3. Check your tax code Everyone is allowed to earn a certain amount each year before income tax kicks in. The current tax-free allowance amounts to £4,895, which increases to £5,035 in the 2006/07 tax year. However, your tax code varies depending on your personal financial circumstances (and HM Revenue & Customers often get codes wrong), so use this tax-code calculator to check yours. Also, this payslip checker will establish whether you're paying the correct amount in income tax and National Insurance contributions (NICs). 4. Prepare your paperwork You have two choices when it comes to completing and submitting your tax return for 2005/06. If you don't want to calculate your tax yourself, then make sure that you submit your form by 30 September 2006. If you want to file online (which automatically calculates your tax for you) or calculate your tax personally, then your submission deadline is 31 January 2007. If you don't file your return and cough up any tax due by this date, you'll pay an automatic fine of £100, so it pays to do your tax return as early as you can! 5. Put more into your pension If you're a basic-rate taxpayer, then income tax costs you 22p of every pound that you earn. Higher-rate taxpayers lose two-fifths (40%) of their earned income in income tax. However, the good news is that you get this money back, simply by making contributions to a company, private or Stakeholder pension. For example, let's say that you decide to contribute an extra £2,000 a year into your pension. You automatically get 22% tax relief on this sum, so £2,564.10 is invested (that's £2,000 divided by 0.78). If you're a higher-rate taxpayer, you can claim a further 18% of this sum, which knocks £461.54 (£2,564.10 times 0.18) off your tax bill. Hence, thanks to tax relief, a high earner sees £2,564.10 invested for a net outlay of just £1,538.46, which is a gain of two-thirds (67%). Also, you should swot up on what the pensions revolution means to you, because it arrives on A-Day, or 6 April 2006! Check out the offers in the Fool's Pensions centre! 6. Bank some tax-free gains If you sell certain assets for more than you paid for them, including shares and investment properties (but not your family home), the profit may attract Capital Gains Tax (CGT). CGT can snatch up to 40% of your profit, so taking steps to avoid it can be very worthwhile. Happily, everyone has a tax-free CGT allowance, which comes to £8,500 for the 2005/06 tax year (£8,800 in 2006/07). However, if you don't use this year's allowance by 5 April, you lose it, so it makes sense to "crystallise" a gain up to this level before then. Therefore, if you've made good profits from shares held outside of ISAs, then banking your profits now could save you a hefty tax bill. One word of warning: in order for transactions to be approved by HM Revenue & Customs (HMRC), you cannot buy back shares in the same company for thirty days. Nevertheless, you can immediately buy them back inside an ISA (known as "bed and ISAing"), or your spouse can buy them back ("bed and spousing"). Buy and sell shares cheaply in our Share-dealing centre! 7. Get tax relief for investing in smaller companies If you're an experienced investor with a passion for higher-risk, higher-return investments, then Venture Capital Trusts (VCTs) might fit the bill. VCTs invest in start-up and small companies, so they aren't suitable for inexpert investors, thanks to their high-risk approach and concentrated portfolios. Nevertheless, the government wants to make investing in small businesses attractive, so, two years ago, it doubled the income tax relief for investing in VCTs from 20% to 40%. Note that even if you're not a 40% taxpayer, you can still claim 40% tax relief on money invested in VCTs. Hence, a £5,000 investment will only cost you £3,000, with the other £2,000 coming from HM Revenue & Customs. However, tax gurus predict that the chancellor will restore the income tax relief to 20% from 6 April 2006, so 2005/06 may be the last time that you can get 40% relief on VCT contributions. Thus, there's been a flood of "hot money" heading for VCTs this year, some of which will produce disappointing returns for investors, even after accounting for the generous tax breaks. To be honest, investing in VCTs purely for the tax relief is putting the cart before the horse. Before you dive in, ask yourself, "Would I invest in this fund if it didn't have these generous tax breaks?" 8. Fight back against higher bills Finally, thanks to rising taxes and soaring housing costs, many British households are feeling the pinch. If you're in this category, and you'd like a little relief from this big squeeze, these articles will help: Here's looking forward to a prosperous and profitable 2006/07! More: Find better bank accounts, credit cards, insurance, ISAs, mortgages, personal loans, savings accounts and stockbrokers!