NEWS & VIEWS
- Nearly half (48%) say budget changes to capital gains tax (CGT) is impacting their business
- This comes as HMRC claps down and triples investigations into unpaid CGT liabilities
- CGT support impacts platform choice for majority of advisers
Research published today by tax reporting experts Financial Software Ltd (FSL) shows more than two thirds of platforms are not providing advisers with holistic CGT planning support, despite it being an issue they’re grappling with daily.
Fewer than a third of platforms provide tax tools that enable advisers to include off-platform assets in their financial plans for clients. This is despite more than one in four advisers (27%) viewing this as important functionality. The same research shows that the same number of advisers (27%) view scenario planning tools as absolutely ‘must have’ features, yet one in four platforms don’t provide them either.
The findings reflect a separate study from the lang cat that shows the recent changes to CGT announced during the Autumn Budget, is impacting nearly half (48%) of advice firms. While nearly a quarter said this impact was sizable.
This comes as more people are being pulled into the scope of CGT, with the latest statistics from HMRC showing that since 2019/20, 36% more people are paying the tax. At the same time, investigations into unpaid CGT liabilities more than tripled to 14,223 in the 2023-24 tax year as HMRC cracked down on investors. This generated £202.4 million in recovered tax – an increase from £180.8m in the previous year.
CGT support influencing platform selection
FSL’s research found that that CGT functionality and support given to advisers via platforms is also influencing their platform selection and due diligence. The majority (76%) of the 130 advisers polled have said that the support offered to them is impacting which providers they’re choosing to work with.
Further data from the lang cat’s Analyser software backs this up. Over the past year, two thirds of advice firms (62%) selected the need for a CGT calculator when conducting their due diligence and looking for platforms to partner with. The analysis shows that having a CGT calculator is now one of the top six core hygiene factors an adviser looks for in a platform out of a total of 600 options. It sits amongst features like having a GIA, ISA, Flexi-Access drawdown, and access to whole of market.
Commenting on the findings, Michael Edwards, Managing Director at FSL, said: “We’re not surprised to see advisers are increasingly concerned about how CGT is impacting their work and clients’ portfolios – especially post-budget. With the government wanting to raise more revenue and further hikes to CGT not being ruled out in the next autumn statement which means more demand on advisers’ time.
“It’s good to see many platforms have the absolute basic tools in place to support advisers. Though it’s increasingly apparent that they need more sophisticated solutions to help ensure clients make the right investment choices, maximise any tax allowances and provide them with the right data to ensure they avoid hefty penalties. This sort of activity can be complicated and time consuming for advisers so it’s vital that they’re adequately supported by their platform provider.”
Greg Moss, Director at 11.2 Financial Planning, added: “CGT planning has become a major issue for the majority of our clients and is a big part of our service and advice process. Changes to allowances in particular have meant many clients now have an ongoing need to plan their disposals and exposure to CGT, and as advisers, we need good, reliable tools to help us with this. Platform functionality is still very variable. Good CGT reporting functionality is a key part of our platform due diligence because it is so embedded in our periodic review process.”
This press release was written in collaboration with the lang cat.