Benefits of being a Skerritts Esprit client

Updates to Capital Gains Tax (CGT)

The chancellor announced in his Autumn budget that the annual CGT exemption will be dramatically halved from £12,300 in the current tax year to just £6,000 in 2023/24 and halved again to £3,000 in 2024/25 tax year. Any gains that exceed the exemption will be taxed at the existing rates of 20% for higher and additional-rate taxpayers and 10% for some basic-rate taxpayers (28% or 18% on gains from residential property).

What does it mean for Skerritts clients?

Skerritts are in a select minority of financial planning firms that are Chartered Financial Planners and have the ability and expertise to manage clients’ investments in-house.

Most advisory firms will devise a financial plan for you but will then outsource the investments needed to make the plan work. As a result, model portfolios require updating, modifying, and changing as funds become inappropriate for your needs.

Any change of these model funds will create a crystallisation event, and this will be chargeable to Capital Gains tax (CGT). With the planned lower allowances, these will be absorbed very quickly, leading to excessive taxation of your funds or the need to leave the funds in situ in potentially under performing funds to avoid the charge.

Here’s an example:

A higher-rate taxpayer who makes a capital gain of £15,000 in the current year would face a charge of £540, next year this same gain would generate a tax liability of £1,800 in 2023/24 and finally an identical gain in 2024/25 would create a bill of £2,400. This is a significant increase of £1,860 over the next 2 tax years.

At Skerritts, with an experienced Investment Committee and Investment Managers, since January 2008  we have run our own  portfolios for clients, tailored to your attitude to risk and agreed objectives.

The investment landscape is an everchanging one, and it is our job to know it inside out so that our clients don’t have to. This allows our clients the peace of mind that their investments will be handled with the highest possible level of efficiency without having to worry about things such as CGT.

Being an Esprit fund client also allows us to react to changing markets more swiftly and efficiently. This allows us to be more responsive and adapt to world events.

Any switch of funds within our Esprit fund range attracts zero CGT, allowing us freedom to alter our fund composition without incurring you any unnecessary and unwanted taxation.

Therefore, for those already in our VT Esprit  funds, you remain safe in the knowledge that as the chancellor reduces your Capital Gains Tax allowances, your funds retain the flexibility to adapt without incurring unnecessary additional taxation.

For those in a model portfolio elsewhere or for those who are looking to invest and wish to discuss the potential of moving or investing your funds to safeguard the future of your capital, please get in touch for a complimentary consultation.

Categories: Financial a​rticles

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