NEWS & VIEWS
Wealth managers need an easier way to report on multi and joint accounts
Increasing numbers of middle earners paying tax
There are many complexities when it comes to creating accurate client tax reports. And the reporting burden will only get heavier as regulations continue to evolve. One of the most significant changes affecting taxpayers and, therefore, advisors and accountants is the reduction in the annual CGT allowance.
Cutting the CGT annual exemption threshold from £12,000 to £6,000 and to £3,000 in April 2024, means a lot more middle earners will be paying tax. Therefore, tax professionals must factor in planning and reporting for a large pool of new clients whose gains were previously covered. A portion of those clients who are married or in civil partnerships will be looking for advice on maximising their joint allowances and monitoring their losses correctly. Consequently, multi-account reporting has become more important, and investors should understand the requirement to report income, gains and losses separately for UK tax purposes.
HMRC now receives a considerable amount of personal financial data, making it easier for them to identify any discrepancies. For example, they are more likely to spot if someone has both a single and a joint account and add the two together to get the amount of tax the individual should have paid. Taxpayers need to know that their wealth manager can provide them with the right information to include on their tax return. Otherwise they could face penalties.
The issue for wealth managers is that a lot of tax reporting software doesn’t have the capability to report on multi or joint accounts. Getting it right will be a time-consuming process with a wide margin for error.
A comprehensive CGT solution for less risk
At FSL, we focus on meeting the needs of our customers to simplify the complex world of investment tax, which is why they can trust CGiX to calculate capital gains and losses correctly for multi and joint account clients.
In line with the tax rules, each individual’s shares are matched to their own holdings, not their spouse’s. In this scenario, if one spouse holds the same share across a solo account as well as a joint account, CGiX will calculate the share matching rules accurately across their accounts. Each spouse may have different figures for their gains and losses, which is correct according to the tax rules.
The correct allocation and utilisation of losses is another important area to consider. For the same reason above, losses are also calculated individually. They cannot be shared, so they must be properly allocated on each spouse’s tax return when using those losses to reduce their chargeable gains or to carry forward any remaining available losses.
Ultimately, wealth managers want a comprehensive tax calculation tool they can rely on to save time and provide the most efficient service for their clients. As the CGT market leader with 30 years of expertise, CGiX uses the latest data-driven technologies to help wealth managers offer more.
Contact us to find out more about how to report joint or multi accounts more efficiently.