Advice firms adjusting planning approaches amid CGT threshold changes

Financial advice firms are overhauling their planning approaches following continued reductions to capital gains tax (CGT) thresholds over the past three years, analysis from Financial Software Limited (FSL) has shown.

Just 11 per cent of advice firms said they had made no changes to their financial planning strategies.

The annual CGT exemption has fallen from £12,300 in 2022/23 to £3,000 in 2024/25, with FSL’s research showing that the proportion of advisers’ clients being affected had doubled to 37 per cent.

Over half (57 per cent) of advisers had increased joint planning between spouses to maximise the use of both individuals’ allowances, the most common response to lower thresholds.

Half (50 per cent) were putting greater emphasis on making sure that clients fully utilise ISA and pension allowances, while 31 per cent were increasing their use of loss-offsetting strategies.

Around 60 per cent of advisers were recommending fewer General Investment Accounts, while 29 per cent were advising clients to defer asset sales, 19 per cent increased the use of CGT-efficient investments, and 18 per cent were encouraging the greater use of gifting strategies.

While CGT planning had become more embedded in routine client reviews, some advisers were questioning whether platform functionality was keeping pace.

Although 62 per cent felt the support they received from platforms was sufficient, 16 per cent said platforms provided limited or no CGT calculators, 11 per cent cited a lack of scenario planning tools, and 2 per cent reported insufficient educational or CGT resources more broadly.

“CGT is no longer a peripheral issue for advisers or their clients,” commented FSL MD, Michael Edwards.

“With more individuals drawn into scope, tax planning has moved centre stage. Advisers are reworking financial plans and making far greater use of tax-efficient structures, which demands accurate data and robust modelling tools.

“CGT planning is inherently complex, so platforms must ensure they provide meaningful support.

“Doing so not only helps advisers deliver better outcomes but also supports their obligations under Consumer Duty, helping clients avoid foreseeable harm such as unexpected tax liabilities.

“Platforms that offer only basic functionality risk falling behind in an environment where advisers need holistic oversight and precision to prevent costly mistakes.”

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