Advisers can help people prepare for tax changes in 2024 by ensuring wealth is spread between spouses, said Andrew Tully, technical services director at Nucleus.
Tully said a focus for advisers in 2024 will be the impact of the reduced capital gains tax exemption.
In April the government will reduce the capital gains tax exemption to £3,000 - it stood at £12,300 before April 2023 and fell to £6,000 in the current tax year.
Tully said: “Trusts will continue to get half the individual exemption, meaning this will fall to £1,500 from April 2024.
“As these exemptions fall, the amount clients can sell without suffering tax consequences will be substantially reduced.
“Advisers can help clients in the run up to these changes. For example, by ensuring they are taking advantage of all personal tax allowances and exemptions, and considering equalising assets between spouses so allowances can be used to maximum effect across the household.”
The abolition of the lifetime allowance will also take effect from April 2024.
Tully added: “While this sounds a simplification, in reality we are replacing one allowance with two key new allowances.
“The industry has around four months from receiving the legislation in the Finance Bill to change systems and literature, as well as communicate significant changes and their implications to customers and advisers.
In particular there are complex transitional rules for those who have taken some benefits before April 2024.”
Tully went on to say the government’s planned consultation on the creation of a pension pot for life needs to ensure things are not made too hard for employers.
Currently, employers are required to enrol eligible new staff into a retirement scheme, chosen by the company.
This has led to employees ending up with multiple small pension pots as they move jobs and switch to their new employer’s scheme.
However, in the Autumn Statement, Hunt announced that workers will be given the right to nominate the pension scheme that their employer pays contributions to.
Tully said: “To make meaningful positive change to long-term savings habits, our recent Retirement Confidence Index highlights we need more people who save more into their pension, to understand why they are saving and what for, and are empowered to save in an environment of trust and stability.
“It is worth exploring whether a pot for life can help achieve those aims. But we need to make sure any solution doesn’t make life overly difficult for employers.”
tara.o'connor@ft.com
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