Financial Planner: Scandals putting clients off tax planning
Scandals surrounding tax evasion and aggressive tax avoidance have put off clients of 15% of advisers from using legitimate tax planning techniques, research has indicated.
Chartered Financial Planner Rachael Griffin, from Old Mutual Wealth, said this is leading to a stigma around legitimate tax planning and making people feel pressured into paying more tax than is necessary.
She warned of the knock on effect this may have.
Fifteen per cent of advisers reported that they have seen a portion of their clients turn away from tax planning as a result of adverse publicity on tax avoidance over the last year.
The majority of the 219 advisers surveyed (84%) told the Old Mutual Wealth survey that their clients were still willing to make use of legitimate tax planning measures.
But more than one in ten advisers have seen up to 20% of their clients put-off legitimate tax planning, while 3% said 20-40% had been dissuaded from planning such as use of gifts and trusts for estate planning, to tax relief when investing in enterprise investment schemes.
Ms Griffin, Old Mutual’s financial planning expert, said: “Efficient tax planning is good common sense and not something to be ashamed of. Those that save for the future and build wealth for themselves and their families should not be put off planning because others choose to abuse the system. But this data shows there is a real risk that normal people feel stigmatised or pressured to pay more tax than is necessary.”
Ms Griffin, who was previously head of product law & financial planning at Skandia, said: “Normal tax-planning tools such as trusts and potentially exempt transfers are permissible under UK tax law and there is no issue with using them to manage personal tax liabilities. These tools are designed to allow people to pass on their accumulated wealth to their children, grandchildren or other friends and family without giving almost half of it to the tax-man.”