What tax planning can be done by a financial adviser?

As a starting point, most tax planning should be done by a qualified accountant rather than a financial adviser. That said, there are some areas of tax planning where it is appropriate for a financial adviser to provide advice, including:

  • Structuring investments tax efficiently. This means using the savings allowance and starting rate band (if available) for interest, the dividend allowance for dividends and the annual capital gains tax allowance for capital gains, as well as making good use of the annual ISA allowance where possible. It may also be appropriate to use an insurance-based investment to defer tax to a later year, often referred to simply as onshore or offshore bonds.
  • Pension funding, including calculation of maximum contributions both from a personal perspective and for employer contributions.
  • Pension crystallisation, specifically with regard to the lifetime allowance.
  • Inheritance tax planning methods, specifically including calculation of available gifting and allowances, use of exempt investments (usually under business relief) and the use of insurance policies written in trust where necessary.
  • Investment-based tax planning using Venture Capital Trust (VCT), Enterprise Investment Scheme (EIS), Seed Enterprise Investment Scheme (SEIS) or other income tax mitigating allowances.

Advisers should generally not be involved in wider tax planning, including drafting of wills, effecting instruments of variation or the establishment of family investment companies or trusts. Instead a professional should be consulted for these areas.