If you are married or in a civil partnership and either yourself or your spouse / civil partner is a non taxpayer, it is worth considering income shifting to utilise both of your personal allowances. With the new 50% tax rate now in force, income shifting is also an effective way of shifting income from a higher rate taxpayer to a lower or basic rate taxpayer in order to reduce the overall tax payable by you and your spouse / civil partner.

There are many ways to do this such as making sure that all of your bank accounts and investments are in joint names or in the name of the spouse / civil partner who is the lower taxpayer. Assets can be transferred between spouses with no tax implications on the condition that the asset is transferred outright with no strings attached.

Income tax savings may also be made if you run a business and this can be done by bringing your spouse / civil partner in as a partner or an employee, although this does attract other costs!

Taxpayers over 65 are able to claim the full age related personal allowance if their income is under £24,000*. If you earn over this amount, the age related personal allowance is reduced until it reaches the basic personal allowance, which everyone is entitled too. In order to preserve this, it may be worth looking at shifting your income to your spouse / civil partner or into tax free investments and making sure you utilise your ISA allowance each year.

*Note that £24,000 is based on 2011-12 rates