Pensioners are being urged to take advantage of ‘use them or lose them’ opportunities for tax saving to enhance their pension portfolios before the end of the tax year.

Following the decision by the Chancellor for capital gains to be taxed at a flat rate of 18 per cent from 6 April, certain long-term investors face the choice of being taxed at the new higher rate on disposal or selling their investment now.

However, Alliance Trust highlights two ways in which investors could use their SIPP to hold on to their shares while only paying ten per cent on gains made so far – either by making an in-specie contribution or by selling their shares to their pension fund.

For example, an investor who has made a £100,000 gain on an AIM share holding could sell these shares to their pension fund or use these shares for an in-specie pension contribution before 6 April and avoid paying an additional £8,000 in capital gains tax (CGT).

The investor would then be free to sell their pension fund holding at any point in the future without incurring any further CGT liability.

Basic rate taxpaying investors should consider whether they are in a position to boost their contributions this tax year to take advantage of the 22 per cent tax relief currently on offer.

With the basic rate of tax set to fall to 20 per cent from April 6, tax relief will also fall by two pence in the pound. The relaxed rules on contributions since A-Day may tempt pension savers to make a significant one-off lump sum contribution ahead of the April deadline.

Alliance Trust also highlights a one-off opportunity around tax year-end for high net worth investors to take advantage of 'input periods' to make three years' contributions in just a few days.

For example, an investor makes a pension contribution of £225,000 gross (£175,500 net) on 25 March 2008, and then nominates to end the input period early on 26 March 2008.

Another pension contribution of £235,000 gross (£183,300 net) is then made on 28 March 2008 and then they nominate to end this input period early on 6 April 2008. On 7 April 2008 another pension contribution of £245,000 gross (£196,000 net) is made.

Each input period ends in a different tax year, therefore the client has made gross pension contributions of £705,000 between 25 March and 7 April 2008 without incurring an annual allowance charge.

Alliance Trust Savings Pensions development manager Steve Latt, says, ‘These issues provide investors with opportunities to improve the tax efficiency of their pension arrangements. However, with the end of the tax year looming, now really is the time to make the most of your tax allowances.

‘As the current tax year ends, the chance to take advantage of today's basic rate of tax and CGT taper relief will be gone for good. By planning quickly and carefully, taking advantage of tactical and long-term opportunities, investors can preserve and build their wealth.’