Six key issues for platforms from Cofunds
By International Adviser, 19 Aug 15
David Hobbs, chief executive of Cofunds, discusses key issues for the platform industry for the remainder of 2015
More and more people will be taking PCLs earlier, although not all will spend it. We’re expecting to see a proportion recycled into tax-advantaged wrappers such as ISA or JISA. This secures the tax free status protecting it from future pensions rule changes. Any reduction to the level or limits for tax relief will not have an immediate impact on most savers as the majority of advised pensions business is derived from transfers.
It’s true the attractiveness of paying voluntary contributions for higher rate tax payers may appear to lose some shine, if the Government’s green paper on pension tax relief further introduces further limits. However, the ability to pass on the pensions funds IHT-free is already present and represents yet another driver for more engagement with pension and family wealth planning.
As a major platform we have to react quickly and decisively to any changes, just as we did with the inheritable ISA allowance. Allowing assets to pass from one ISA to another, on death of the spouse or civil partner, gives a new “second life” to investments on the platform, and the value of an ISA that has accrued over many years is now not always lost on death. However, the shine has reduced for pure cash ISAs where the return has been poor now for a number of years.
The return on modest cash holdings will be tax free outside of ISAs from next April 2016. There is also a potential for peer-to-peer lending to mushroom, wrapped in a “special P2P ISA” with more details expected later in 2015.
