AIC welcomes improved flexibility for investment trusts
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The Association of Investment Companies has welcomed proposals by the Government to increase the flexibility and reduce the compliance costs of investment trusts in the UK.
In its consultation paper, the Government says it wants to set out a modernised regime for investment trusts in the UK, including a reforming of the tax rules to allow a wider range of investment strategies.
This includes a ‘white list’ of financial transactions which investment trust companies can undertake and will not be taxed as trading receipts. This includes shares and stock, loan relationships, relevant contracts (derivatives), units in collective investment schemes, securities of any description in the previous categories, buying or selling foreign currency and carbon emission credits.
The Government is also looking at ensuring that UK investors continued to make choices for commercial as oppose to tax reasons, prevent unintended taxes through investment trusts and implemented any new tax rules at no overall increase in cost to the UK Exchequer.
AIC director general Ian Sayers says: “Today’s announcement is an important step in modernising the rules for investment trusts which have stayed largely the same since their introduction in 1965. Traditionally the tax rules have meant investment trusts have focused on equity investment. These new rules offer the opportunity to diversify and offer new means of generating shareholder returns.
“Reform should also help reduce ongoing administrative costs. It will move investment trusts to a new system of ongoing self-assessment and away from a requirement for annual approval. This will reduce the bureaucracy involved with maintaining an investment trust’s tax status and bring the sector into line with other collective investment products.
“While for the most part the proposals are very positive, care will have to be taken to ensure that the transition to a new regime takes account of the needs of all investment trusts. We look forward to working with officials to fine tune the proposals to secure the best possible result.”
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