Lockdown measures were imposed in late March - did you miss out on maximising your ISA subscription for 2019/20? That opportunity has now gone but for 2020/21, don’t wait. Act now to utilise your 2020/21 allowance and benefit immediately from the income and capital gains tax advantages.

Likewise, were you considering an ISA transfer before lockdown? If so, it just got more flexible.

For a 2019/20 transfer, savings relating to any 2019/20 payments had to be transferred in whole. Not now, 2019/20 savings are now ‘prior year’ and any savings relating to payments in earlier years can be transferred in whole or in part.

Many people will have suffered real financial hardship during lockdown but for many, reduced expenditure both during lockdown and moving forward may create excess income.

Have you built up savings over the lockdown period?Do you foresee a fall in your ongoing expenditure, perhaps through reduced travel costs? What plans do you have for those accidental savings or increased income? How might you invest that money or help protect you and your family with it?

Have you suffered investment losses?

Consider a client who has suffered a 20% investment loss – perhaps a £50,000 OEIC investment is now worth £40,000. Consider encashing those OEIC shares and make a £40,000 relief at source pension contribution (assuming relevant earnings suffice). A capital loss of £10,000 is ‘banked’ for offset against subsequent capital gains and thanks to pension tax relief, the scheme administrator will claim £10,000 basic rate relief from HMRC to make £50,000 gross. If the client is entitled to tax relief above the basic rate, that can be claimed via Self-Assessment. 

What happens if you have an accident or an illness and lose mental capacity? Don’t get caught out.

In England & Wales, there are two types of Lasting Power of Attorney (LPA) – Health & Welfare and Property & Financial affairs.

In Scotland there are three types of Power of Attorney (PoA). A Continuing POA gives powers to deal with money and/or property. A Welfare PoA gives powers to make decisions around health or personal welfare matters. A Combined POA does what it says on the tin!

In Northern Ireland

In Northern Ireland, if you want a POA to continue after becoming mentally incapacitated, then an Enduring POA is required. This can give a general authority to carry out transactions on the donor’s behalf or a specific authority.

Do you have a valid will?

Having a will gives clients the power to decide who their assets pass to on death. For those dying without making a valid will, statutory rules will apply that may see assets pass to those whom the deceased never intended. Most wills are straightforward and inexpensive to prepare but it is important to use a reputable and qualified practitioner as a badly drafted will can have unintended consequences.

Do you have any discretionary trusts in place?

Discretionary trusts arise in a variety of circumstances. For example, a bond and trust arrangement from an insurance company... a by-pass trust for pension death benefits... a trust created in the client’s will. An expression of wish enables your client to inform the trustees of matters to be considered when exercising their discretionary powers. It may not be legally binding on the trustees but imposes a moral duty to follow your wishes. Don’t forget those nominations for pension schemes either!

Prior to 6 April, did you fail to utilise your £3,000 IHT Annual Exemption?

Remember that any part of the annual exemption not used in 2019/20 is carried forward (rolled-over) into 2020/21. It can only be carried forward one year. That potential sum of £6,000 can be used to cover pension contributions for family or maybe loan waivers for any insurance company loan trusts your client set up in the past. For married couples and civil partners, perhaps £12,000 is ‘up for grabs’. Remember any growth is immediately outside the estate so assuming markets rise, a delayed gift could see some cash left behind. 

Has your IHT planning been thrown off track by lockdown?

If so, it’s never too late. In many cases, IHT planning involves reducing the estate by gifting. Certain exemptions are time sensitive but otherwise, IHT planning should simply be undertaken sooner rather than later and larger gifts should be made as soon as possible so that the 'seven-year clock' starts ticking. A gift now starts the clock and keeps any growth outside the estate.

For shareholders and directors - is your company accumulating surplus cash in these uncertain times?

To weather the financial adversity faced by many businesses, companies commonly retain increased cash buffers in case of any further shocks. All companies need working capital that is readily accessible but if they have more on deposit than they need, is this surplus cash working hard enough for them? Directors may consider investing with the aim of resolving those poor returns available on deposit accounts, but they will be keen to avoid undue volatility. The choice of fund is vital to provide comfort that the funds will be available when required.

Are you aware of the tax efficiencies of Gift Aid?

Perhaps this question will resonate with many who, more than ever, are keen to give to charity.

Charities can reclaim tax on any donations made by clients, whether large or small, regular or one-off – provided the conditions for tax relief are satisfied. Gift aid donations are regarded as having (20%) basic rate tax deducted by the donor. This means charities can then reclaim the basic rate tax from HMRC, and so a gift of £10 under gift aid is worth £12.50 to the charity. Clients who pay tax at a higher rate than 20% can then claim the correct amount of additional relief on top of this. It’s even possible in certain circumstances for donor to elect to carry back relief to the previous tax year.

Gross gift aid payments are deductible in the Adjusted Net Income (ANI) calculation and extend the tax bands. Remember for example that the personal allowance is restricted where adjusted net income exceeds £100,000.

A word of warning though, any gift aid payments must be disregarded in the Top Slicing Relief calculation.

As we emerge from lockdown many people may have a different view of the world, investments and their mortality. Financial circumstances, needs and objectives will have changed and evolved for many. Advisers are well placed to help their clients make new plans or adjust their exisiting ones to suit the “new normal”.