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Why you need to keep on top of the details for tax planning success

Tony WickendenIn trying to keep up with the big picture, it is easy to lose track of smaller – but still important – changes
to legislation

Financial planning is important. And financial goals are important. Goals are important to the success of any endeavour, of course. How can you hope to achieve anything of value if you have not got a clear idea of what you are seeking to accomplish? A financial planner has an important role in goal setting – monitoring, refining and executing plans to achieve them.

Goals are very personal and should be expressed by the person setting them, the client, in plain English.

The planner can help sharpen them and give them focus, and provide expertise around the context, the necessary actions to achieve them and the consequences of particular pathways.

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However, this article is to remind readers how important it is to constantly pay attention to the detail of the many technical changes to legislation and financial planning best practice that occur throughout the year, with a particular spike at the time of the Budget and the ensuing process that leads from the Finance Bill to the Finance Act.

It is hardly surprising that, at a time of parliamentary preoccupation with Brexit, there has been little fundamental legislative change to get our heads around of late. That is not to say there will not be any once we have a Brexit resolution though (whatever that ends up looking like). Indeed, some of the official briefings, consultations and reviews – for instance, of pensions tax relief, inheritance tax and trust taxation – tell us that there could be some change to come.

But aside from these reviews and consultations on big themes, there has been a continuing flow of relatively small changes that are worth noting. It is pretty much the same every year: a potentially daunting flow of small changes which, taken alone, especially at a busy time, may lead you to conclude that not doing the detail on them will not cause major detriment to your ability to do your job.

And you will almost certainly be right. However, over time, not embedding this detail will contribute to a growing knowledge gap; a growing inability to give the truly expert advice that is worth paying for.

Because, ultimately, true expertise, the kind that cannot readily be Googled, is where the future of paid-for advice lies.

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Former head of Albany Life Ralph Sepel once stated with passion and belief, at an adviser conference I was also presenting at, why it is so important to keep learning.

The alternative, he said, was to “know more and more about less and less until you know everything about nothing”.

OK, you can probably pick some holes in that statement, but the sentiment is hard to argue with.

Take this last Budget where we saw relatively small – but important – changes to the criteria for qualifying for entrepreneurs’ relief, rules on the residence nil rate band, rules on determining whether an employer/employee relationship exists and new £1m annual investment allowance provisions.

Add to that the provisions of the Scottish Budget, the outcomes of the Office of Tax Simplification’s review of IHT and the HM Revenue & Customs consultation on trust taxation.

The combined effect of either not knowing about or not knowing the detail and potential implications for planning of just those changes listed above is not good.

However you do it, whether through your own resources or through smart outsourcing, you must establish a way to ensure that relevant changes are identified, understood and assimilated into your advice process.

Tony Wickenden is joint managing director of Technical Connection (a St James’s Place Wealth Management group company). You can find him Tweeting @tecconn

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