Pictured above: Andrew Hubbard, National Chair of Tax at RSM Tenon

The Chancellor of the Exchequer has indicated that the 50% tax rate is a temporary tax and has commissioned a review into its effectiveness. RSM Tenon believes that although the 50% rate is likely to be abolished by the end of this Parliament, it is almost certain that it will be replaced by some other form of tax on wealth - the unpopular "Mansion Tax" has already reared its ugly head again in the last week or two and there have also been murmurings about increasing Stamp Duty.

Until then though, the 50% tax rate is here to stay and with the reduction in the basic rate band for 2011/12 we will see a growing number of taxpayers fall into the top tax bracket.

The new tax year starts next week but if you act fast there is still time to make sure your affairs are tax efficient and you have maximised all reliefs for the current tax year.

Top tips from RSM Tenon's Wealth Experience: 

Here are RSM Tenon's top tips for helping minimise tax liabilities:

1) Tax efficient investments - Although relatively simple, ISAs are extremely tax efficient. Make sure you make full use of your allowance for this year of £10,200 (£5,100 cash) - if you don't use it you will lose it!

2) Time your income and know your tax brackets - make sure you are making maximum use of personal allowances and lower rate tax bands for you and your spouse. Where you have influence over the timing of your income - as do many entrepreneurs - work out the timing of bonuses and dividends as it can make a big difference.

3) Form of income - Whilst capital gains tax rates increased in June, the top rate is still substantially lower than the highest rate of income tax. As an entrepreneur you may have the ability to extract the wealth out of your business in the form of capital (i.e. shares) rather than income, especially if the income is surplus to current requirements.

4) Wealth planning - Passing wealth onto the next generation is always a difficult subject but with no reduction in the inheritance tax burden in sight it is an issue that can't be put off.  There are many planning ideas and IHT efficient structures and products in the market place which can mitigate the burden.

5) Review your pension planning strategy. From next April, UK resident taxpayers will only enjoy tax relief on the first £50,000 of annual contributions paid into their pension schemes, compared with the current maximum of £255,000, albeit that for many people relief is now restricted to basic rate tax over a certain limit The total lifetime 'pension pot' that qualifies for tax breaks will also be cut from £1.8 million to £1.5 million in a change which could affect over 100,000 high earners. In the meantime, there are some opportunities for some to maximise tax relief if action is taken before the 5 April 2011.  

For more information on these initiatives please email twe@rsmtenon.com

Andrew Hubbard, National Chair of Tax at RSM Tenon, said:

"Despite a relatively positive Budget for Entrepreneurs, there was little in the way of good news for individuals on the personal tax front and they continue to feel the weight of the tax burden on their shoulders. Whilst we accept that we all have to pay our taxes, there is no reason why we should pay any more than we have too. Everyone should be aware of these sensible planning tips and manage their affairs to minimise their tax burden. We all work hard to create our wealth - we need to work equally as hard to protect it."