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Last week’s news of a pending UK Capital Gains Tax (CGT) review will come as little surprise to many – Covid-19 support measures will need to be paid for. Arguably, it could be the starting gun for further tax reviews, and it could well hasten some family conversations about money – particularly when it comes to the passing down of wealth to younger generations.

interactive investor, the UK’s second largest direct to consumer investment platform, says that whilst CGT is irrelevant for most people, an impending CGT review is a good excuse to look at finances from a family perspective. And to sort out those Bed and ISA transfers if necessary.

Rebecca O’Keeffe, Head of Investment, interactive investor, says:

“CGT is irrelevant for most people – with a £20,000 annual ISA allowance, and an annual pension allowance, all but the privileged few need to worry about CGT – even then it’s a first world problem. Even so, those with investments outside a tax wrapper who haven’t fully utilised their tax allowance might want to get cracking with their ‘Bed and ISA’ transfers, shifting money into a more tax friendly wrapper, although you might incur CGT, depending on your circumstances.”

O’Keeffe says that if you sell eligible holdings from your trading account, interactive investor will buy the same stock into your ISA, treating it as a subscription for that tax year, and will not charge for the sale – online or telephone trade commission only applies to the re-purchase.

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It is worth comparing platform costs if you are shopping around, and this is where it can get murky – not all platforms are as upfront on these charges as they could be, so do get on the phone to your provider.

But with a starting gun now fired for a CGT review and potentially higher taxes more generally down the line, now is a good time to talk about money and plan your finances as a family. For example, a family of four currently has a tax free ISA allowance of £58,000 (£20,000 for adults, £9,000 for children) – so it’s important to look at finances as a family, making sure – if you are lucky enough – that everyone’s annual ISA allowance is fully utilised, including spouses.

“I’d also expect to see a hastening of the intergenerational passing down of wealth to younger generations amongst the wealthy,” adds O’Keeffe. “With reduced job prospects, scrapped internships, job offers revoked, and arguably now a starting gun fired for other tax changes down the line, many families will already have been thinking about passing down wealth sooner rather than later. A CGT review could hasten this, and I’d expect to see more families gifting assets to younger family members, which can be exempt from tax if you live for seven more years.”

As a consequence of this, we may see some young people coming into large sums of money without the knowledge of how to manage such large sums. Parents might want to start passing on wealth in a slow but steady manner to test the waters, and it’s an important time to start talking about money. Financial education from a young age – whether you are one of lucky few or not – is crucial.


Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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