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Alliance Trust says Sipps can solve CGT dilemma

Alliance Trust is urging advisers to make the most of tax-saving opportunities to enhance clients’ pension arrangements before the tax year ends.

The provider says the abolition of taper relief due to come in from April 6 mean that some investors face the choice of being taxed at the new higher rate of capital gains tax on disposal or selling their investment now.

But Alliance Trust says investors could use their self-invested personal pension to hold on to their shares while paying only 10 per cent on gains made so far, either by making an in specie contribution or by selling their shares to their pension fund.

The client would then be free to sell their pension fund holding at any point in the future without incurring any further CGT liability.

Alliance Trust says advisers with basic-rate taxpaying clients should consider whether to boost their pension contributions to take advantage of 22 per cent tax relief before it falls to 20 per cent from April 6.

It says the relaxed rules on contributions since A-Day also mean that clients could make a significant one-off lumpsum contribution ahead of the April deadline.

Pensions development manager Steve Latto says: “These issues provide advisers with opportunities to improve the tax-efficiency of their various clients’ pension arrangements. However, with the end of the tax year looming, now really is the time to make the most of your clients’ tax allowances.

“As the tax year ends, the chance to take advantage of today’s basic rate of tax and CGT taper relief will be gone for good. By planning quickly and carefully, taking advantage of tactical and long-term opportunities, advisers can help clients preserve and build their wealth.”

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