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IFAs reap harvest of Widows&#39 windfalls

Scottish Widows is predicting a business boom for IFAs as thousands of its policyholders reinvest windfall payments.

Widows predicts the whole exercise will generate tens of millions of pounds for IFAs across the whole market. Its research shows 47 per cent of members will reinvest some or all of their windfall payment.

But some IFAs have voiced concerns that the rush to take windfalls as cash could leave clients with potentially massive capital gains tax bills.

Policyholders had the choice of receiving their windfall as cash, as a payment into Scottish Widows Bank or as a loan note. If the windfall exceeded the annual CGT allowance of £7,200, the policyhol-der could tick a box to automatically receive a loan note to avoid CGT.

But many policyholders were unable to make a clear decision because Widows was unable to confirm the size of the windfall in advance.

Head of IFA sales and development Robert Wyllie says: “This is a massive revenue opportunity for IFAs. We have kept IFAs in the loop so they would be alert to the opportunity these windfalls present.”

But Carrington Investment Consultants head of retirement William Sallitt says: “Lots of policyholders appear not to have known the size of their payouts and would not have got advice. Many may not have appreciated their windfall takes them over the CGT threshold for the year.”

Windfalls of change, p34

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