The Default Tax Table Assumption is found in Plan Settings > Inflation / Growth.
To edit this assumption in the client case you are currently working in, go to the Plan Settings and expand Inflation / Growth.
The Default Tax Table Assumption can be used to edit and apply an across-the-board annual escalation to the following assumptions, relating to taxes, and contribution allowances (with the default rate of escalation being set at 4%):
- Tax brackets (basic & higher-rate tax thresholds)
- National Insurance earnings thresholds
- Personal Income Tax allowance
- Annual income threshold, above which phase-out of the personal income tax allowance begins
- Annual income threshold, above which tapering of the (60k) annual allowance begins
- 'No-earnings' pension contribution allowance
- Capital Gains Tax allowance
- ISA contribution allowance
Separate settings are available to escalate the IHT Nil Rate Band and Main Residence Threshold, if desired.
Nil Rate Band Escalation % - The inheritance tax threshold (nil rate band). This is set at 325k until 2028 (as per current legislation), and begins to escalate thereafter, as set using the Nil Rate Band Escalation.
Residence Nil Rate Band (RNRB) Escalation - The main residence nil-rate band is set at £175k until 2028, after which it is escalated based on assumed CPI %.
Main Residence Threshold Escalation - The Main Residence Threshold Escalation preference allows advisers escalate the phase-out threshold for the Residential Nil Rate Band (RNRB).
Lifetime Allowance (LTA) Escalation - For the UK software, the future Lifetime Allowance (LTA) is escalated based on assumed CPI %.
State Pension Escalation - In line with the so-called triple lock, the software will increase the state pension, year-on-year by the greatest of the following three measures:
- National Average Earnings (NAE) assumption
- CPI assumption
- 2.5 per cent
Tax related assumptions that are not escalated
The software does not escalate EIS and VCT contribution limits.