With tax year-end fast approaching, here are some suggestions from Gareth Davies, Pensions Specialist at Scottish Widows, for how you can make the most of this busy time, for you and your clients.
Know your limits
One of the most important things is to be aware what the main pension and ISA allowance limits are both now and in the future. Do you know which of your clients have not utilised all of their allowances yet, and have historically been in a position to do so?
It’s not just about the current tax year. Allowances change over time, as we’ve seen with the abolition of the Lifetime Allowance and the increase in the Money Purchase Annual allowance. And with whispers that the new government may look at cash ISA’s in the future, this makes it an opportune time to talk to clients about their current allowances.
With the long-term benefits of maximising allowances via additional contributions or increasing existing regular contributions being potentially significant for your clients.
Think about what else is coming
The full impact of the last Autumn Budget on financial advice and clients is not yet known, especially with the IHT and pensions consultation just closed. However, the ‘first in last out’ view of pensions as part of a portfolio may be subject to change.
Pensions will likely still be ‘first in’ with compelling incentives such as tax relief, the potential for tax free investment growth and up to 25% tax free cash available up to the Lump Sum Allowance. Being ‘last out’ is less of a certainty, as we may see more pensions accessed earlier in the future to prevent them from forming part of a client’s inheritance tax bill.
What is true is that the budget impacts every one of your clients from an IHT perspective, but the impact will be specific to each. Does that mean a refocusing of assets across a client’s wrapper and related questions around how you prioritise maximising allowances across Pensions vs ISA’s? Whatever you decide, it’s an opportunity to prove the value of your advice to your clients.
Start early (or never stop)
The period around tax year end is a busy time for the industry. As such, it is definitely a good idea to beat the rush and not leave this to the last minute, with providers publishing their tax year end servicing deadlines to help you here.
There is an argument that much of the last-minute tax year end activity could be avoidable. With many advice firms arguing that discussions around allowances should form part of the annual client review process.
Building this into the review process, or even starting a bit early, can allow you to engage your clients and evidence the value of advice whilst managing and mitigating the effects of these annual increases in client demand.
Use the support that is out there
Providers have developed a number of features and functionality that can make your lives easier in relation to tax year end.
With digital adviser platforms able to offer services that can support you at all stages of tax year end planning. Starting from useful MI reporting to help you identify those clients that may be able to maximise their benefits, to useful online tools and calculators that help you to understand the potential impact of allowances on your clients. Finally, you should be able to use their digital straight through processing to pay in a client contribution.
Learn how Scottish Widows Platform can help
- Find insights and guidance by visiting our Countdown to Tax Year End page.
- For the key servicing deadlines visit our Tax Year End webpage.
- Visit our useful Support Hub – a central resource – including information on our new BED & ISA functionality
- Find out more about our integrated platform tools, including our Capital Gains Tax Tool which enables you to calculate the realised capital gains and losses that your clients have incurred on the Scottish Widows Platform.
With tax year-end fast approaching, here’s some suggestions for how you can make the most of this busy time, for you and your clients.
Know your limits
One of the most important things is to be aware what the main pension and ISA allowance limits are both now and in the future. Do you know which of your clients have not utilised all of their allowances yet, and have historically been in a position to do so?
Gareth Davies is a Pension Specialist, Scottish Widows.
