First among these is the personal savings allowance, which will see basic rate taxpayers receive the first £1,000 of interest tax-free and higher rate taxpayers the first £500.
When the change takes effect from 6 April, banks and building societies will stop automatically taking 20 per cent in income tax from interest earned on non-Isa savings.
Alistair Wilson, head of retail platform strategy at Zurich, told FTAdviser the government has not yet decided whether platforms will be required to pay gross interest on money sitting in cash, but advisers should keep a watchful eye on the debate to make best use of tax wrappers for clients.
Another issue coming in the Spring is to do with changes to dividend taxation, with the new tax-free allowance replacing the dividend tax credit rules, which will affect the taxation of unwrapped investments on platforms.
“From April 2016, investors will not pay any tax on the first £5,000 of income they receive from dividends,” said Mr Wilson. “Dividend income over this amount will be taxed at 7.5 per cent for basic rate payers, 32.5 per cent for higher rate payers and 38.1 per cent for savers in the additional rate band.”
Half-yearly statements and consolidated tax statements produced by platforms will need to be altered, which should make completing tax returns simpler for clients, while advisers will need to pay greater attention to the funds that pay interest and those that pay dividends.
“Given the large volume of cash being pumped into multi-asset style funds, this will be particularly interesting for assets held outside of Isas and pensions, identifying which funds pay interest distributions and which funds pay dividend distributions,” noted Mr Wilson.
“So for clients looking to leverage their income from different pots as they drift into retirement this becomes more interesting, accepting it will principally be the high net worth individuals with unwrapped assets who will be affected.”
Danny Cox, a chartered financial planner with Hargreaves Lansdown, commented that neither the new personal savings allowance, nor the new dividend tax rules, are widely understood by the general public.
“Advisers need to help their clients understand the changes and how they can arrange their financial plans to make the best use of these tax breaks.
