Only one in three platforms provide advisers with the necessary tools to include off-platform assets in capital gains tax calculations, according to tax reporting firm FSL.
Research published by FSL said the absence of such tools means two thirds are platforms are failing to offer advisers “holistic CGT planning support” despite it being an issue they are face with daily.
This is despite more than one in four advisers (27%) viewing this as important functionality, FSL found.
The same research shows the same number of advisers (27%) view scenario planning tools as absolutely ‘must have’ features, yet one in four platforms do not provide them.
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FSL said it findings support a separate study from the Lang Cat that found the recent changes to CGT announced during the Autumn Budget are impacting nearly half (48%) of advice firms. Nearly a quarter said this impact was sizable.
More people are being pulled into CGT scope with the latest statistics from HMRC showing that since 2019/20, 36% more people are paying the tax, FSL noted.
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.
FSL’s research also found that that CGT functionality and support given to advisers via platforms is influencing their platform selection and due diligence.
The majority (76%) of the 130 advisers polled said that the support offered to them is impacting which providers they’re choosing to work with.
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 this means more demand on advisers’ time.
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“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 to 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, 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.”
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