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AITC says scrap VAT on trusts to boost savings

The AITC is urging the Government to abolish VAT on the management services supplied to investment trusts, arguing that it reduces their competitiveness compared with Oeics and unit trusts.

In its response to the Government&#39s consultation on the way that VAT is levied on pension and investment funds, AITC technical director Ian Sayers says scrapping the tax would bolster savings into Isas, stakeholder and the Sandler products.

Sayers says investment trusts suffer discrimination because Oeics and unit trusts are not subject to VAT. He believes scrapping VAT would save the investment trust sector about £40m a year.

He says it would provide a boost to investors, as many of the bigger generalist trusts are more than 50 per cent owned by retail investors.

Sayers says the artificial tax distortion could prevent providers from meeting the Government&#39s 1 per cent cap, which is under consultation.

He says: “The tax is against the interests of consumers who choose to invest in the stockmarket through ITCs and is detrimental to the wider market as it reduces their competitive position compared with unit trusts and Oeics.”

The Treasury says taxes are only considered at Budget time.

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