The functionality and support given to advisers on capital gains tax (CGT) is influencing their platform provider selection and due diligence, according to research published by Financial Software Ltd (FSL).

The study, conducted by The Lang Cat, showed that 76 per cent of advisers felt that the CGT support offered to them was impacting which platform providers they were choosing to work with.

It also found that more than 91 per cent of advisers believed that CGT was of greater concern for them and their clients compared to two years ago.

The findings come as more people are being pulled into the scope of CGT, alongside widespread speculation that the tax could be reformed in the upcoming Budget.

To support their work with clients, two thirds (66 per cent) of advisers said a CGT calculator was ‘essential’, while a further 19 per cent felt it was ‘important’.

CGT functionality that includes assets’ book cost, where assets’ original cost is listed, was considered essential by 63 per cent and important for 30 per cent of respondents.

The Lang Cat’s analysis also showed that 62 per cent of advice firms selected CGT tools when conducting their due diligence and searching for platforms to partner with over the past year.

Having a CGT calculator was found to be the top-ranking extra feature out of 600 options, sitting below the ‘vital’ hygiene factors of having a GIA, ISA, flexi-access drawdown, and access to whole of market.

“We know that CGT is a growing issue for more investors, so advisers want to provide the very best support to their clients,” commented FSL MD, Michael Edwards.

“This means providing them with accurate and timely insights to ensure they maximise all the tax allowances and exemptions available.

“As we head towards the budget, speculation around what might happen to CGT is creating more uncertainty, so advisers are likely to be under additional pressure to reassure clients that their assets will be protected.”

Also commenting on the findings, Wren Sterling head of research, Gareth Hope, said: “With the expectations of increases to CGT rates ahead in the October Budget, and the near extinction of annual exempt amounts under the previous government, then the challenges of CGT planning are only set to continue.

“Part of our job is to help clients steer through these challenges, and that is almost impossible without good reporting and tooling to show the options beforehand, and aid reporting afterwards.

“CGT planning and reporting tools should now be a hygiene factor for platforms, and anyone that hasn’t paid their tool (if they have one) the love it deserves in recent years, may start to find that advisory businesses actively choose against it for both new clients, but also clients already on the platform.

“The lack of data that is ported with provider switches only serves to disadvantage clients and their planning and I’d support any cause that sought to make that a mandatory part of the provider switch process.”

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