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F&C rejects Sandler claim over life funds&#39 tax bias

Sandler&#39s claim to be levelling the tax playing field bet-ween life offices and fund management companies has been dismissed by F&C, which claims the arena is already tilted in fund managers&#39 favour.

Speaking at the F&C round table meeting in London last week, group head of insurance products Derek McLean said fund managers already benefit from certain capital gains tax advantages and Isa allowances which put them in a more favourable position.

Sandler&#39s report claims that life companies enjoy a fav-ourable tax treatment and recommends the abolition of the 5 per cent withdrawal rule.

McLean said: “The 5 per cent rule is being sold as a benefit when in fact it is the lessening of a disadvantage. The biggest difference between life and fund management companies is in tax. In a life company, you pay CGT regardless.”

Aegon UK spokeswoman Lesley McPherson says: “If the knock-on effect of Sandler is a review of life company taxation, we would hope it looks at it as a whole rather than focusing on one or two isolated elements, given that it is such a complex area.”

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