Due diligence: CGT functionality influencing platform selection

25 October 2024

More than three quarters (76%) of advisers say that capital gains tax functionality and support offered to advisers via platforms is influencing their platform selection and due diligence, says Financial Software Limited.

As speculation around changes to the CGT regime gathers pace ahead of Labour’s inaugural Budget, the tax reporting specialist said that 91% of advisers reported that CGT is of greater concern to them and their clients compared to two years ago.

It comes as more people than ever before are being pulled into the CGT net, with the latest data from HM Revenue & Customs showing that since 2019/20, the number of people paying the tax has risen from 272,000 to 369,000, an increase of 36%.

To better support their clients, two thirds (66%) of advisers said a CGT calculator is essential and a fifth (19%) described it as important. CGT functionality that includes assets’ book cost, where assets original cost is listed, is also considered essential by 63% and important for 30%.

Michael Edwards, managing director at Financial Software Limited, said: “We know that CGT is a growing issue for more investors so advisers want to provide the very best support to their clients.  This means providing them with accurate and timely insights to ensure they maximise all the tax allowances and exemptions available.  As we head towards the budget, speculation around what might happen to CGT is creating more uncertainty, so advisers are likely to be under additional pressure to reassure clients that their assets will be protected.”

Gareth Hope, head of research at Wren Sterling, added: “CGT planning and reporting tools should now be a hygiene factor for platforms, and anyone that hasn’t paid their tool, if they have one, the love it deserves in recent years, may start to find that advisory businesses actively choose against it for both new clients, but also clients already on the platform.

“The lack of data that is ported with provider switches only serves to disadvantage clients and their planning and I’d support any cause that sought to make that a mandatory part of the provider switch process.”

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Professional Paraplanner