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E&Y: Platforms need to abandon rebates by April 2014


All platform providers will need to abandon fund manager rebates and move to clean share classes by April next year, Ernst & Young says.

In March, HM Revenue & Customs issued a statement confirming cash and unit rebates from asset managers to investors will be subject to income tax from 6 April.

In a report published this week, Ernst & Young says HMRC’s position on rebates will force asset managers, platforms and advisers to review payments made directly to end investors.

The report says: “We believe all providers will need to transition to ‘clean’ share classes without rebates by the end of this financial year.

“And as far as legacy business is concerned, advisers will need to consider whether an immediate transfer is appropriate for clients.

“If this is the case, legacy trail will be lost and fees for ongoing services will have to be agreed.

“This could pose serious issues for some firms including reduced revenue and – until fee arrangements are put in place – revised assumptions around business valuations.”

Alliance Trust has already confirmed it will convert all legacy business into clean share classes by the end of 2013.

Skandia, meanwhile, has begun offering 75 basis points share classes on its platform with rebates of 8bps.


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There are 3 comments at the moment, we would love to hear your opinion too.

  1. Anthony Rafferty 3rd May 2013 at 3:43 pm

    No they won’t. What’s wrong if a platform offers a rebate, clearly explains how it works, passes it on to their customers and takes care of the tax for them. In actual fact, most assets will be in tax free wrappers, so the tax won’t be an issue.

  2. Who is running this country?
    Is it The FCA
    Ernst & Young
    The EU
    or the British government?
    Why are we voting for the latter if it is any of the former?

  3. Wesley Haslett 3rd May 2013 at 4:42 pm

    Can someone tell stupid old me
    If I have a number of old pep’s and isa’s done directly via a company eg M & G do I keep the trail or not?

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