What tax-inefficient financial planning is costing you

Tax planning remains one of the most impactful ways wealth managers can improve outcomes for their clients. While investment performance across platforms has become increasingly standardised with the rise of Model Portfolio Services and inexpensive passive options, advisers can still deliver exceptional value via tax efficient strategies. 

For clients navigating multiple life stages, from accumulation to phased retirement, strategic tax planning is essential. Each stage presents different planning opportunities, and different complications: when partners have different retirement timings, separate finances, or when transitioning between employment, DB pension access, State Pension eligibility and full retirement. Some clients even spend periods as non-tax residents while traveling, creating additional planning scenarios.

With numerous tax allowances and wrapper options available, mapping a staged withdrawal strategy that accounts for these transitions is crucial. This approach not only minimises tax liabilities but can potentially achieve tax-free retirement income for many clients, even as tax rules evolve. By keeping more assets invested for longer periods, clients can further support an enhanced lifestyle throughout their retirement journey. 

Navigating these variables requires sophisticated planning, expert advice and right-fit tools.

The hidden cost of incomplete planning

When cashflow forecasts fail to account for real-world tax implications, the consequences ripple throughout the advice chain. For clients, disappointment becomes inevitable when projections show pre-tax returns rather than what they actually keep.

Further, regulatory scrutiny is continuing to intensify around suitability and transparency to the point that oversimplified tax assumptions create unnecessary risk exposure. Tax considerations should be built into existing tools and workflows to maintain operational efficiency for advisory firms. 

Real-world impact on client outcomes

Consider this reality: a client's retirement income might look perfectly adequate in a basic cashflow model. Yet when proper taxation of dividends, capital gains and pension interactions are accurately calculated, that same "comfortable" retirement suddenly reveals a previously unseen shortfall.

Poor tax planning can force clients to make late lifestyle changes to restrict their expenditure and make their income last or even rethink their legacies to consider the HMRC’s take in addition to their beneficiaries.

Clients pay their financial advisers for the confidence of expertise and precision; a disconnect around taxation undermines the very value proposition of financial advice. 

Eliminating tax planning compromises

Fortunately, tax inefficiency is avoidable. FE CashCalc now offers enhanced Gross Cashflow functionality to bring tax-aware planning directly into your existing workflow:

Dividend & Savings Taxation 

See what clients keep, not just what they earn, with accurate modelling that reflects real-world tax exposure. Model how dividends and savings are taxed as income when applicable, including often-overlooked scenarios such as reinvested accumulation funds that still trigger annual tax liabilities. Accurately calculate what clients keep after tax across various rates, while accounting for the capital gains exemption on previously taxed reinvestments (particularly important as CGT rates approach income tax levels at 18% or 24%).

Capital Gains for GIA 

Time withdrawals strategically by modelling tax allowances, band shifts, and liability management within general investment accounts. Optimise tax efficiency for employee share schemes and equity-based remuneration (increasingly common components of compensation packages). Compare investment strategies based on tax implications (e.g. GIAs vs Bonds). 

Pension Salary Sacrifice 

Precise calculations help you compare net vs gross earnings to optimise take-home pay against pension contributions. 

Building tax-aware planning into your workflow sets a foundation for better advice. By bringing sophisticated tax calculations into the familiar FE CashCalc ecosystem, you can now deliver more accurate projections without investing in costly separate systems or wrestling with yet another spreadsheet workaround.

The bottom line

As client expectations continue to rise, approximations and simplified assumptions in financial planning become increasingly insufficient. The FCA’s Retirement Thematic Review underscores this reality: effective retirement planning requires precise modelling and accurate forecasting for each unique client’s situation. While investment preferences may overlap, lifestyle differences demand truly personalised approaches.

Demonstrating clear, tax-optimised strategies through every phase of the financial lifecycle must become standard practice, and you’ll need the right tools to make it happen. When those tools are combined into a single suite of solutions built for advisers, you can discover the next level of efficiency and savings for your team and deliver the individualised planning that clients expect.