Charlie Mills highlights some of the planning opportunities to utilise in the lead up to tax-year end.
With tax-year end fast approaching, it is understandable that many will focus on the volume of ISA sales that occur before 5 April 2012. With the success, or otherwise, of ‘ISA season’ being dictated largely by investor confidence, we are far from being assured of a prosperous first quarter of 2012. The VIX index – a forward indicator of volatility in investment markets – currently stands at 29 points and it was only slightly higher, at 34.74, the week after Lehman Brothers filed for bankruptcy protection in September 2008. This suggests that 2012 looks likely to start off in a similarly volatile fashion to the way 2011 has ended.
The good news for advisers though, is that tax-year end is about far more than ensuring clients have fully utilised just one tax wrapper. Significant opportunities exist for advisers and their clients to plan their affairs to minimise tax and make the most of all available tax reliefs.
Where clients have the majority of investable assets on one platform, the process of moving money between wrappers can be facilitated with reasonable ease to take advantage of allowances and reliefs. Taking Bed and ISA for example – the Chancellors Autumn Statement announced the capital gains tax allowance would be frozen in 2012/13 at £10,600. With most expecting it to increase by inflation this represents a real terms reduction. However, with ISA allowances increasing to £11,280, the opportunity to utilise Bed and ISA becomes increasingly attractive. Greater still if markets are low and clients can shelter more units in a tax efficient ISA. Clients with money in a Skandia Collective Investment Account can Bed and ISA for multiple tax years by filling in one simple form.
Joined up admin and valuations aside, one of the benefits of doing this on a platform is that investment portfolios can remain the same across tax wrappers, meaning that additional tax wrappers don’t have to mean additional portfolios for advisers to worry about.
This is just one of the opportunities where advisers can demonstrate the value of their advice to clients, something that will be increasing important in the run up to RDR. On the opposite page, Adrian Walker looks at some of the key pension planning opportunities that tax-year end presents, however, advisers should be encouraged that there are opportunities for significant planning, even when markets may not look enticing to their clients.
Charlie Mills is a Financial Planning Specialist at Skandia.