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Budget could cause structured shake-up

Gilliat Financial Solutions managing director Adrian Neave says tax legislation in next week’s emergency Budget could herald widespread changes for the structured product industry.

Neave believes a capital gains tax hike could alter the way products are delivered in the market. He says: “If there are draconian tax changes, particularly to CGT, people will have to think about what their delivery mechanisms are and that could change the landscape in terms of the product range firms offer.

“It may mean taking people on who have expertise in different areas of financial services than those traditionally associated with structures.”

Neave says individuals with expertise in manufacturing collectives such as Oeics and long-only vehicles would be particularly useful. He says: “There are going to be a melding of people who understand structures and people who understand the mechanics of funds, how they operate, the market for them and how they integrate with the platforms.

“The delivery mechanism for structured products will change so we will need to expand our range further. We will see offerings that are not traditional tranche-based products and fund or collectives-based vehicles used a lot more.”

Lowes Financial Management managing director Ian Lowes says the possible tax changes create an uncertain backdrop but feels that investors should react to the result of changes rather than speculate.

He says: “There is talk of the 40/20 per cent rate coming back in, taper relief and of the capital gains tax allowance being dropped. There is so much going on that it would be wrong to speculate.”


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