The chancellor announced plans for the HMRC to work with the industry to tackle the fund specific Schedule 19 Stamp Duty Reserve Tax regime.
The tax, which only affects UK funds, is paid in addition to the SDRT paid on fund acquisitions of UK equities. It is currently paid by UK funds investing in other funds, even if those other funds are not invested in UK equities. This tax element being removed will put UK-domiciled funds on a level playing field with offshore funds.
The Government has also announced plans to launch a working group to consult with the industry to create a tax-transparent contractual fund as well as a new regime for funds invested in non-reporting offshore funds.
IMA director of authorised funds and tax Julie Patterson says: “This, coupled with the introduction of tax-transparent contractual funds, will enable the UK to compete as a domicile for the new Ucits master-feeder structures and for hedge funds coming onshore.
“It follows on from improvements to the UK’s fund tax regime that IMA has secured over the past few years, including certainty that funds will be treated as investing not trading, tax-efficient regimes for securities and property funds, and a workable regime for institutional funds. The more funds that chose to domicile here rather than offshore, the more business and employment taxes are received by the UK Exchequer.”