Financial advice firms are overhauling their planning approaches following continued reductions to capital gains tax (CGT) thresholds over the past three years, analysis from Financial Software Limited (FSL) has shown.

Just 11% of advice firms said they had made no changes to their financial planning strategies.

The annual CGT exemption has fallen from £12,300 in 2022/23 to £3,000 in 2024/25, with FSL’s research showing that the proportion of advisers’ clients being affected had doubled to 37%.

Over half (57%) of advisers had increased joint planning between spouses to maximise the use of both individuals’ allowances, the most common response to lower thresholds.

Half (50%) were putting greater emphasis on making sure that clients fully utilise ISA and pension allowances, while 31% were increasing their use of loss-offsetting strategies.

Around 60% of advisers were recommending fewer General Investment Accounts, while 29% were advising clients to defer asset sales, 19% increased the use of CGT-efficient investments, and 18% were encouraging the greater use of gifting strategies.

While CGT planning had become more embedded in routine client reviews, some advisers were questioning whether platform functionality was keeping pace.

Although 62% felt the support they received from platforms was sufficient, 16% said platforms provided limited or no CGT calculators, 11% cited a lack of scenario planning tools, and 2% reported insufficient educational or CGT resources more broadly.

“CGT is no longer a peripheral issue for advisers or their clients,” commented FSL MD, Michael Edwards.

“With more individuals drawn into scope, tax planning has moved centre stage. Advisers are reworking financial plans and making far greater use of tax-efficient structures, which demands accurate data and robust modelling tools.

“CGT planning is inherently complex, so platforms must ensure they provide meaningful support.

“Doing so not only helps advisers deliver better outcomes but also supports their obligations under Consumer Duty, helping clients avoid foreseeable harm such as unexpected tax liabilities.

“Platforms that offer only basic functionality risk falling behind in an environment where advisers need holistic oversight and precision to prevent costly mistakes.”

---