The appetite for even the most standard tax planning is being dented by a raft of negative publicity around tax evasion and aggressive tax avoidance, according to a survey of financial advisers by Old Mutual, with trusts and estate planning viewed as potentially risky
The survey of 219 financial advisers found that 15% of financial advisers report that clients have been put off legitimate tax planning over the last year.
Although the majority of advisers (84%) say their clients are still willing to make use of legitimate tax planning measures, a number of clients are turning their backs on perfectly reasonable tax planning as a result of high-profile tax scandals.
One in ten advisers have seen up to 20% of their clients put off legitimate tax planning, while a minority said that up to 40% of their clients had been dissuaded from planning.
The nervousness about potential risks associated with legitimate tax planning measures extends to the use of gifts and trusts for estate planning, as well as concerns about access to tax relief when investing in enterprise investment schemes (EIS).
Old Mutual Wealth financial planning expert Rachael Griffin said: ‘Efficient tax planning is good common sense and not something to be ashamed of. This data shows there is a real risk that normal people feel stigmatised or pressured to pay more tax than is necessary.
‘Normal tax-planning tools such as trusts and potentially exempt transfers are permissible under UK tax law and there is no issue with using them to manage personal tax liabilities.
‘The majority of these tools are designed to allow people to pass on their accumulated wealth to their children, grandchildren or other friends and family without giving almost half of it to the taxman.’