How can the right platform selection increase business efficiency at Tax Year End?

April Calendar
  • Author : Novia Financial
  • Date : 8 Mar 2022

For Adviser use only

Tax Year End is upon us once more and with it comes the certainty of a busy period. Efficiency is vital at this time of year, both for an advisor firm’s stress levels and to ensure your clients’ subscriptions land at the right time. Selecting the right platform can make a big difference.  

To facilitate efficiency at this time of year, a platform should offer:

  • Easy access to client MI to understand which clients have used their 2021-22 tax allowances.
  • Good online functionality to allow simple GIA to ISA transfers within the new business journey, with the option to use the available cash in the GIA, or to sell down assets.

But it needs to do more than that. For the complete package, the platform should also offer:

  • A Capital Gains Tax (CGT) Calculator with ‘what if’ scenario planning options
  • A range of optimal tax wrappers to meet your clients’ needs, including a Flexi-ISA and a Junior ISA
  • Expert support and easy access to online training material

This combination of support helps to smooth out the tax year end process, allowing you to spend more quality time with clients knowing that the reporting you use is accurate, your recommendations are based on market-leading tools and the processing of new business will be streamlined and quick. The alternative could mean you find yourself having to run numerous internal excel spreadsheets to work out tax gain and then make recommendations to move assets between providers to utilise tax allowances.

Here at Novia Financial, we offer all these features through the streamlined and user-friendly Adviser Zone portal. Having added a JISA to our proposition last year, this will soon be enhanced to make the new business and top up journeys fully online. We also recently enhanced our cutting-edge CGT calculator, adding the “What If” scenario planning functionality. And we’re delighted to confirm our ISA has been awarded a five-star rating from Defaqto in 2022. Not only that, but our platform also received a five-star rating, in addition to a Gold rating for platform service. (For more on the support we provide, see our Tax Year End Support page.)

What are the benefits of a Flexi-ISA?

A flexi-ISA allows a client to make extra contributions to replace any withdrawals they’ve already made in the current tax year.

For example, if a client had withdrawn £10,000 from their ISA mid tax year for a home emergency, a flexi-ISA allows the adviser to recommend to the client that they can pay £30,000 into their ISA in that tax year, rather than just the usual £20,000 allowance i.e., they can replace the withdrawal they made without impacting their annual subscription.

But if a flexi ISA isn’t available, the withdrawal can’t be replaced and your client can only use the annual subscription of £20,000. It could mean your client is left with £10,000 extra in their GIA suffering a less advantageous tax position, impacting their returns over time and leaving you unable to maximise your services to the client. (Follow this link to see a case study based on a real client.)

Why do I need access to a Junior ISA for my clients?

Generational tax planning using a Junior ISA is becoming an interesting advice area now that parents can contribute up to £9,000 per year into their child’s Junior ISA. The subscription can be used every year building up a fund which can be withdrawn by the child from age 18 tax free, or the JISA can be converted to an ISA for the now adult child. Using a JISA allows parents to save tax-efficiently to help their children fund university fees, or to help with a deposit for their first home.

This inter-generational tax planning is a key part of tax year end activity for clients who are parents with excess assets to maximise their returns as a family by paying less tax.

A JISA also allows alignment of the investment strategy for the Junior ISA to that of the parents, rather than the potential inefficiencies and restrictive investment options of holding these assets off platform through an ‘old fashioned’ Child Trust Fund (CTF).

Being able to assess your clients’ capital gains liabilities accurately

A CGT calculator that automatically works out tax gains or losses at fund level, using platform MI – without having to manually input valuations and unit prices – helps to simplify your tax year end processes and reduce business risk.

This type of functionality allows you to check various scenarios before making any sale requests, allowing them to target a specific gain, or specific proceeds. These systems calculate and present the suggested assets to sell, to achieve the specified outcome.

When calculating CGT, it’s important you can assess the client’s complete investment circumstances to provide an accurate report. This means it’s vital that the CGT calculator you use allows the flexibility to capture previous acquisition costs in respect of re-registrations and in-specie transfers, to ensure accurate tax calculations can be completed to avoid over taxation. Normally CGT tools assume the book cost to be the point of re-registration and thus capture an inaccurate valuation for the tax calculations – being able to input actual costs provides a more accurate position.

In summary, tax year end planning is deadline driven and needs to be as efficient as possible. If you currently use the Novia platform and want a refresher on any of these features and want to find out what’s new, or if your current platform of choice does not offer the crucial combination of features described above, then please contact your Novia Relationship Manager or Regional Sales Manager to see how you can improve your business efficiencies and reduce your business risk.

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