The Default Tax Table Assumption is found on the Preferences screen (the cog icon, top-left).
To edit this assumption in the client case you are currently working in, go to the Plan Preferences, on the right side of the screen. Expand Default Inflation / Growth Rates.
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 (40k) annual allowance begins
- 'No-earnings' pension contribution allowance
- Capital Gains Tax allowance
- ISA contribution allowance
Separate settings are available on this panel to escalate the IHT Nil Rate Band and Lifetime Allowance (LTA) for pensions, if desired.
Nil Rate Band Escalation % - The inheritance tax threshold (nil rate band). This is set at 325k through 2020 (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 escalated based on assumed CPI %.
Lifetime Allowance (LTA) Escalation - For the UK software, the future Lifetime Allowance (LTA) is escalated based on assumed CPI %. Read more >>
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
Other growth related assumptions, such as inflation, can be edited at the plan level, in Preferences > Plan Preferences or at the individual item level on the various data entry screens, in Advanced Settings, on the Growth, Inflation, or Details panel, depending on the screen.
Any preference set at the item level will override the initial defaults set in Plan Preferences.
Tax related assumptions that are not escalated
The software does not escalate EIS and VCT contribution limits.
Plan Preferences vs. System Preferences
Changes to this setting on the mirror Default Inflation / Growth Rates panel in System Preferences, on the left side of the screen, will be used only going forward, as you create new client cases. System Preferences are used as a template only for new client cases. Changes to System Preferences will not retroactively affect your existing client cases.
If you want to change this preference in any existing client cases, you will need to open and edit them individually, in each case's Plan Preferences.