View more on these topics

Stephen Womack: Will it be a Happy New Tax Year?


Do not make the mistake of thinking you have time to pause for breath. After the rush of last- minute questions, applications, pension top-ups and Isa reshuffles, tax year 2016/17 is now history.

Yesterday, we bid a cautious welcome to tax year 2017/18, which will bring with it fresh challenges, new numbers to commit to memory and a whole new set of new financial planning opportunities. In some cases, there may only be days to ensure clients benefit fully from them, hence the need for a flying start to the year.

Take Isas, for example. There is the welcome and significant uplift in the annual allowance to £20,000. That is a combined £40,000 per couple that can be safely squirrelled away in a tax-advantaged account.

And with these sort of numbers, why wait until the end of the tax year to move assets under the Isa umbrella? I have a good number of clients where we agreed to sell assets in the final couple of weeks of last tax year (taking profits on equity funds and using capital gains tax allowances while we were at it) ready to add the maximum possible to their Isas as soon as we are able.
There is the added delight this year of the new Lifetime Isa. That is, if you can find a provider willing to take your client’s money. This is a clunky and complex product, and I can see why many of the banks and building societies are cautious about in-branch sales.

That said, as IFAs providing a fully advised service, we can see a myriad of potential uses. I have a few clients, for example, who are “late 30-something” high earners and annual allowance capped for pension saving. They may not be the target market but they are eager to commit £4,000 a year until age 50, effectively clawing back in Lifetime Isa bonus a fraction of what they have lost in pension tax relief. But where a client’s 40th birthday is April or May they need to be signed up and saving in to a Lifetime Isa in double quick time.

This is also the tax year where we expect the tapered annual allowance to really bite. Many of our high-earning clients have been able to continue pension funding as normal so far by using up their remaining carry forward allocations. But that carry forward pot is dwindling, so fresh thinking is needed.

Like other advisers, we have seen more appetite for investments into venture capital trusts and enterprise investment schemes as pension saving is shut off. But capacity with the most credible providers in this arena is always limited, so a lesson for this year is to have clients “teed-up” and “pre-advised” on the concepts. This means we can move quickly on their behalf as and when the right doors open.

Last month’s U-turn over National Insurance rises shows there is little chance of an increase in the basic rates of tax this Parliament. With public finances so tight – and the Chancellor now boxed in – I fear this brings both pension tax relief and the relatively generous tax treatment of capital gains back into focus as potential revenue earners. So it is a year to make the most of both these options while we can. Happy new tax year to you all.

Stephen Womack is a chartered financial planner and director of David Williams IFA



Stephen Womack: Training young advisers will reap rewards

Earlier this month, I spent a fascinating day as one of the judges for the Personal Finance Society’s Chartered Financial Planner awards. The judging panel quizzed those shortlisted for the individual chartered award and the representatives of the firms who made it to the final three in the chartered firm award. I have been lucky […]


Stephen Womack: Advice is the calm amidst Brexit noise

“May you live in interesting times” is widely known as a Chinese curse. Supposedly, by wishing your enemies to war – the interesting times – you were wishing them ill. In fact, the curse is a myth. There is no equivalent Chinese saying and the “interesting times” phrase can probably be traced back to the […]


Stephen Womack: The dangers of forcing firms to give pro-bono advice

Last month, I was lucky enough to attend the latest Personal Finance Society graduation ceremony. Held in the splendour of the City of London’s Insurance Hall, I joined more than 100 other chartered financial planners and fellows of the society to formally graduate. A word of advice for anyone invited to graduate: go. It was a memorable […]

A DGT with 100% access and 100% discount?

Clare Moffat, Technical Manager, looks at the benefits of pensions from an IHT perspective. 100% access and 100% discount – what type of wrapper could this be? A pension! Post flexibility there is 100% access (for those over 55) and normally pensions are inheritance tax (IHT) free. With flexibility the options available on death mean […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm