Nine in 10 financial advisers (91%) see capital gains tax (CGT) as becoming a greater concern over the past two years.
The figures come from a study commissioned by the lang cat involving over 130 financial advisers.
Research from investment tax reporting software maker Financial Software found CGT is ‘gathering momentum’ as a worry among investors, as growing numbers seek expert advice to protect their assets.
The latest HMRC data shows a 36% increase in people liable for CGT since 2019/20. Since then, numbers paying the tax have risen from 272,000 to 369,000.
Similarly, forecasts from the OBR show CGT receipts are expected to surge to £15.2bn in 2024-25 following last year’s reduction in the Personal Allowance from £12,300 per year to £6,000. With the allowance halved again to £3,000 for the current tax year, the expectation is that CGT receipts will increase further still.
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Over the past year, two thirds of advisers (62%) selected CGT tools when conducting their due diligence and looking for platforms to partner with.
Research also shows that having a CGT calculator was the top-ranking extra software feature out of a total of 600 options, sitting below the vital hygiene factors of having a GIA, ISA, Flexi-Access drawdown, and access to whole of market.
Michael Edwards, MD, Financial Software, said: “These findings confirm what we are hearing from our conversations with advisers as more people are being brought into scope for CGT with persistent pressures on the Personal Allowance.
“Understandably, many investors will be feeling nervous about potential changes to the regime and how this might impact their assets. They will be turning to advisers for their expertise to ensure they maximise all the tax allowances available to them.”
Greg Moss, founder of Eleven.2 Financial Planning, added: “CGT is definitely going to be a big planning issue for clients and their advisers for the foreseeable future. Shrinking allowances have already moved us from a position where most mass affluent clients have few planning needs around CGT, beyond making sure allowances don’t go unused, to us having to be far more hands-on, manging the tax exposure and trading off portfolio structure with tax incurred.”
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