Summary
Custom tax account enables advisers to model complex investment wrappers not supported by default in Timeline Planning.
A Configuration section offers granular tax controls such as withdrawal tax, capital gains tax, growth tax, and IHT exclusion.
Allows approximate modeling of all non-standard accounts
Description
Financial plans often include investments in accounts with complex tax treatments like Venture Capital Trusts (VCTs), Onshore Bonds, Loan Trusts, and more.
The Custom account type can become a powerful account to rule them all. The custom account has a Configuration section, which appears in the account page when a custom tax account is selected.
Advisers now have direct control over tax-related behaviours to reflect real-world account dynamics.
Tax controls in the Configuration box
Control | Description |
Tax type | Choose from a curated list of tax wrappers (VCTs, Offshore Bonds, EIS, Trusts, etc.). No impact on the calculation engine, just a label. |
Yearly withdrawal allowance | Set a tax-free withdrawal amount per year before taxation applies. |
Minimum investment period (lock-in) | Define how long funds must be held before withdrawals are allowed. |
Withdrawals not taxable after year | Specify when withdrawals become tax-free. |
Withdrawal tax | Tax rate applied to withdrawn amounts (formerly “Income tax”). |
Capital gains tax | CGT applied on gains upon withdrawal. |
Growth tax | Ongoing tax on unrealised growth. |
Excluded from estate (IHT) | Choose the year from which the account is excluded from the estate for inheritance tax planning. |
These settings allow advisers to accurately replicate complex tax wrappers without needing one-to-one modeling for each wrapper type.
Example
🟦 1. Venture Capital Trust (VCT)
Tax characteristics:
No income tax on dividends.
No capital gains tax on disposal.
Must be held for 5 years to retain upfront income tax relief.
30% income tax relief on investment. This needs to be added as a contribution
How to model it:
Setting | Value |
Tax type | Venture Capital Trust |
Yearly withdrawal allowance | £0 (dividends are tax-free, so no cap needed here) |
Minimum investment period | 5 years |
Withdrawals not taxable after year | 0 (not applicable – dividends tax-free from the start) |
Withdrawal tax | 0% |
Capital gains tax | 0% |
Growth tax | 0% |
Excluded from estate (IHT) | Set if applicable based on underlying BR-qualifying investments (often VCTs are not BR-qualifying) |
🟧 2. Onshore Bond
Tax characteristics:
“Gross roll-up” with 20% life fund tax paid internally — no ongoing personal tax during accumulation.
Top-slicing applies to withdrawals (income tax treatment at the marginal rate).
5% per annum withdrawal allowance.
Full withdrawal after 20 years may trigger tax depending on personal circumstances.
How to model it:
Setting | Value |
Tax type | Onshore Bond |
Yearly withdrawal allowance | 5% of original investment per year (entered in £) |
Minimum investment period | 0 (withdrawals allowed anytime) |
Withdrawals not taxable after year | Leave blank (withdrawals may be taxable even after 20 years depending on circumstances) |
Withdrawal tax | Estimate based on income of the client (may be higher or lower due to top slicing) |
Capital gains tax | 0% |
Growth tax | 20% (representing life fund tax paid internally) |
Excluded from estate (IHT) | No — subject to IHT, so leave blank |
🟩 3. Business Relief (BR) Scheme (e.g., AIM Portfolio)
Tax characteristics:
Qualify for 100% Inheritance Tax relief if held for 2 years and still held at death.
No special income or capital gains tax benefits — taxed as standard unwrapped investments.
How to model it:
Setting | Value |
Tax type | Business Relief Scheme |
Yearly withdrawal allowance | £0 |
Minimum investment period | 0 (can be withdrawn at any time) |
Withdrawals not taxable after year | Leave blank |
Withdrawal tax | Set to the client’s marginal income tax rate if expecting income withdrawals. |
Capital gains tax | 20% (standard CGT for higher-rate taxpayers) |
Growth tax | 0% |
Excluded from estate (IHT) | Year 2 (assumes continuous holding and death after that year) |
Conclusion
The Custom tax account feature increases the coverage and flexibility of the financial plan. By empowering advisers to model a wide range of complex account types through configurable tax controls, we reduce reliance on external software and ensure plans remain compliant, transparent, and tailored to real-world client needs.