THE end of the tax year is only a month away, but you can still knock thousands of pounds off your bill for 2007-8 before the end of the fiscal year on April 5.

Accountants say it is more important than ever to make use of all the allowances and reliefs as higher mortgage repayments, soaring fuel bills and inflation-busting council tax rises eat into family finances.

Some households have an added incentive to get their affairs in order as changes to the capital gains tax (CGT) rules threaten to leave thousands of investors worse off.

So here are tips to cut your tax bill before the April deadline.

Invest in a venture capital trust

One of the best ways to cut a tax bill is to invest in a venture capital trust – although it is really only an option for sophisticated investors as they are high risk.

You get income-tax relief at 30% on contributions to new VCT shares of up to £200,000, even if you are a basic-rate taxpayer, provided you hold the shares for five years. So if you invested the £200,000 maximum, you would get a tax rebate of £60,000. You must hold your VCT shares for five years to qualify for the tax breaks and the VCT itself must invest in firms worth less than £7m.

Such small firms have a higher failure rate than larger ones.

Most of this year’s schemes are raising money to top up existing funds. Our table shows how VCT managers have fared. Martin Churchill at Tax Efficient Review, an independent adviser, recommends Close Enterprise, which invests in technology companies, pubs and restaurants.

Fund managers are also offering “protected” VCTs which aim to limit their clients’ potential losses while still offering juicy tax breaks. If you want a protected VCT, Churchill suggests Downing’s funds.

The minimum VCT investment is normally £5,000 and they should make up no more than 10% of a portfolio – so you need assets of at least £50,000.

Consider an enterprise investment scheme

If you have recently sold shares and are liable for capital-gains tax on profits above your annual allowance (£9,200 this year), you could invest the proceeds in an enterprise investment scheme (EIS) to defer the bill.

An EIS can invest in small unquoted companies worth less than £7m in £2m chunks.

Some invest in a single firm, others into several. The range of investments is wide, from pubs to breeding racehorses.

The schemes allow you to defer CGT from the previous three years, or the subsequent 12 months. You will be liable to pay the CGT when the EIS shares are sold, but you could offload them gradually over a number of years to use up several CGT allowances.

EISs also qualify for income-tax relief at 20% on investments up to £400,000. EIS shares may also become exempt from inheritance tax after two years.

Richard Allen at Allenbridge, a financial adviser, likes the funds run by Arc and Lacomp, both of which have an established track record of running EIS schemes. Always take advice.

Use your Isa allowance

You can invest up to £7,000 in an equity Isa this tax year and the returns will be tax-free.

The maximum investment ina cash Isa is £3,000.

If you do not invest before April 5, you will lose this year’s allowance.

Savers who want to invest their full Isa allowance before the end of the tax year but are concerned about the volatile stock market, should consider “phasing”.

Several investment firms and fund supermarkets offer a phasing option, in which your money is gradually invested over a number of months. As long as you buy the phased investment before April 5, it will still count towards this year’s Isa allowance.

Split what you own

If you are a higher-rate taxpayer, but your husband or wife is in a lower bracket, you can cut your income tax bill by transferring assets into the name of the lower taxpayer.

Don’t dismiss child vouchers

Millions of workers are missing out on substantial tax savings because they don’t sign up for their employers’ childcare vouchers.

The schemes allow you to swap part of your salary for vouchers worth up to £55 a week, which you must put towards a government-register-ed nursery, child minder or nanny. Where a husband and wife are working, both of them can claim. The money is paid before income tax and National Insurance contributions (Nics) – a saving of about £2,100 a year if one of you is a higher-rate taxpayer, and the other works part-time and pays tax at the basic rate.

Boost your pension contributions

Workers can take out a personal pension alongside their company scheme, pay in extra contributions and get a rebate when they fill in their tax return.

You and your employer can invest an amount equivalent to your annual salary each year and receive tax relief on the contributions, up to a maximum of £225,000.

The government offers tax relief on contributions of 22p for every 78p invested. A higher-rate taxpayer can claim a further 18p through their tax return.

By contributing an extra £6,000 to their pension a higher-rate taxpayer gets £2,400 in tax relief.

Beat the trust penalty

Tens of thousands of people are being urged to review their wills or face being stung with inheritance-tax (IHT) charges on their assets.

The clampdown hits two types of trust that are often written into wills to provide for family members – accumulation and maintenance (A&M) and interest in possession.

Before the new rules, gifts into the trusts were usually exempt from IHT but from April they could be subject to 20% tax above the IHT threshold of £300,000, as well as 6% charges every decade.

The charges applied immediately to trusts set up after March 2006, but existing trusts were given until April 5 this year to make changes.

Families can avoid the new charges on an A&M trust by making sure that the children become absolutely entitled to the assets at 18.

If you have an interest in possession trusts you should consider whether you want to change the named beneficiary before the new IHT regime comes into full force. Take action to change the beneficiaries before the end of the tax year and you escape the tax charges.

RELIEF FOR BACKING START-UPS

PUTTING his money into an Enterprise Investment Scheme (EIS), enabled Hubert Matthews, 46, to slash this year’s tax bill.

Matthews, from Oxford, has invested in the Oxford Gateway EIS to benefit from the tax breaks.

He said: “The tax advantages are great and I also get to back start-up businesses.”

With an EIS you get 20% income-tax relief on investments of up to £400,000, and can defer capital-gains tax on earnings from other investments if you roll them into the scheme.

Matthews, who works in computing, said claiming tax relief was easy. He receives an EIS certificate, which he sends to Revenue & Customs with his tax return.