One result of a top rate of income tax of 50% and a bottom rate of capital gains tax of 10% (with the highest rate being 28%) is that it makes sense to try to and rearrange your financial affairs so as to take advantage of the cheaper tax. The extent to which you will be able to achieve this potential saving will be determined by your circumstances and the source of your income. I have just heard of an interesting example in which an employee of a fairly large company set up a separate business (unrelated to his employer's business) that was, eventually, acquired by his employer. He paid tax of just 10% (thanks to entrepreneur's relief). As it was a genuine, arm's-length commercial transaction (and not simply to avoid tax) HMRC did not see fit to challenge it. Had the whole thing been planned in advance or had the employee been a shareholder in the employer's company it is possible HMRC might have objected.

Wishing for something doesn't make it so. HMRC's newest edition of its guide to residence and domicile (HMRC 6) contains some subtle changes when compared to the previous version. What they are trying to do, of course, is to bring more and more people into the tax net without a change in legislation. Instead, they are interpreting recent court decisions in a way that suits their perspective. This is doubly irritating. It will mean time, money and anxiety for taxpayers forced to challenge or defend something that the legislature or judiciary never intended. And it means that there is a risk that the changes end up becoming permanent because they were never tested. Why won't the British government come up with a clear, simple set of rules to cover residence? The American system, by comparison, is straightforward. You can stay in the country so many days a year (it is averaged out on a rolling basis) after which you are resident.
There are also a number of inaccuracies in HMRC6 relating to National Insurance. For instance, it is wrong on the treaty with New Zealand and also regarding the rules for social security within the EU. Anyway, if you are in any way concerned with residency or domicile it is worth downloading a copy from the HMRC website.

The Office of Tax Simplification has published its first report as part of its review of the 1,042 different reliefs that are available to British taxpayers. They have picked out 13 examples in order to demonstrate their thought process prior to producing a final set of recommendations for the Chancellor which is due in the late spring or early summer of this year. When this is completed they will examine another 74 reliefs and after that a further 75 reliefs and so forth. What is clear from the report is that this is not tax simplification but wholesale change to the tax system. For instance, it is recommended that luncheon voucher relief (the first 15p a day is tax free) be removed and research and development relief be altered. If the government wants to overhaul the tax system - fine - but at least be honest about it and don't try and pretend it is being simplified, when it isn't.

I have just been sent this excellent list covering the key principles involved in effective tax planning.

1. Plan well in advance
The earlier you start the planning process, the more tax you can hope to save. Prior to making any major financial decision (investing, receiving income, selling an asset and so forth), consider the tax opportunities.

2. Be flexible
The more flexible you are, the more tax you can expect to save. Even a modest change to your plans may result in a substantial benefit. A major change, such as moving abroad, could save you a fortune.

3. Never miss an opportunity to save
There are over a thousand reliefs and allowances available to you. Take advantage of them all, no matter how small, because the cumulative effect will be worthwhile. After all, a £3,000 annual tax saving invested over 10 years could be worth as much as £50,000.

4. Get expert help
Tax legislation has become so complex you can't rely on an ordinary accountant to optimise your savings. Employ a qualified tax consultant (a member of the Chartered Institute of Taxation) or, of course, contact our esteemed expert, Alan Pink.

5. Stick to the plan
When tax planning fails it is almost always because the taxpayer hasn't followed the necessary set of actions. Another reason to call in expert help.

6. Arm yourself with the facts
Our online archive is packed full of useful articles and other reference material.

7. Don't let the tax tail wag the investment dog
Don't make any investment simply because of the tax advantages it offers. If it isn't a good investment without the tax breaks, it probably isn't a good home for your money.

8. Don't take unnecessary risks
There are thousands of perfectly legal ways to save tax. Don't be tempted by complicated plans that depend on an optimistic interpretation of the law.

9. Be persistent
A large part of tax planning is simply the willingness to keep searching for a workable solution. Faint heart ne'er won fair tax break.

10. Enjoy yourself
Avoiding tax can be a highly satisfying and rewarding intellectual pursuit, requiring creativity, ingenuity and acumen. Those who enjoy the sport tend to enjoy the biggest savings.

If rising land prices and higher yields have failed to tempt you to invest in British farmland it is worth remembering that it is a fantastic tax-saving vehicle. Indeed, if you run the farm business yourself, the benefits are huge. Genuine losses can be set against your other income, borrowing will be tax-deductible, assets can be passed around between members of the family tax-free and there are dozens of useful reliefs you can take advantage of, such as the favourable treatment of furnished holiday lets or the tax-free status of woodland. Proper structuring can achieve all sorts of favourable results, including a tax-free sale or the ability to pass the farm tax-free to your heirs.