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Phil Wickenden: Tax planning is not what it seems

Advisers have a responsibility to reassure clients permissible tax effectiveness is safe.


Some things are not quite what they seem. When my 18-month yells “door” he is not, in fact, pointing out a hinged barrier at the entrance to a room. Rather, “door” is a direct order to open, close, switch on or switch off the thing he is wildly gesticulating at. 

This is perhaps hereditary, thinking back to my “dut de guts” (translation: up the stairs or down the stairs). 

At least doors do open or close, so there is a clear link – “dut de guts” just gets you referred to a speech therapist, a recommendation my mother declined to follow up on, which may explain a lot.

As the typical adviser’s raison d’etre moves further away from investment performance per se, tax optimisation has moved increasingly to the centre ground of planning. It has also edged its way to the front pages of the press, courtesy of numerous “scandals” (Big accountancy firm accused of saving people money”… sacré bleu).

Minimising tax on investment income, capital gains and capital/inheritance and on benefits from pension arrangements is something within the adviser’s control and a means of delivering additional return (by keeping more) or enabling a level of income or return to be achieved with less strain on capital or with less risk. This is something 80 per cent of advisers believe is critical to their business. 

Interestingly, for all the furore, advisers do not think this has become any more important over the last couple of years.

Despite the stated importance to business, only 40 per cent of advisers fully implement the tax planning ideas they put to their clients (in connection with non-pension financial products). Just under half of those that do not claim this is because “it is not their core business”, which feels a bit anomalous.

By not paying enough attention to delivering solutions tax-effectively, it is arguable the job has been done less than perfectly. 

As long as the planning is the “right side of the line”, using permissible reliefs and strategies, then there is a duty of care.

It is entirely understandable that, with schemes now being attacked through the courts and with the issue of accelerated payments notices, individuals may be nervous about any form of tax-effective planning. 

In which case advisers have a responsibility to reassure that permissible tax-effectiveness is safe and that pension, Isas, ordinary IHT planning with trusts and protection plans in trust are all entirely legitimate vehicles.

Wickenden Chart 190215

Phil Wickenden is managing director of So Here’s The Plan 



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