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Fund managers to pay for Labour plans to scrap bedroom tax

Labour leader Ed Miliband has pledged to repeal the Government’s controversial “bedroom tax” which will be partly funded by reintroducing a tax paid by UK-based fund managers.

The so-called bedroom tax, or “spare room subsidy”, was a reform to housing benefit which came into force in April. Under the changes, council house tenants deemed to have more bedrooms than they need have had their housing benefit reduced.

The reform has been criticised for disproportionately affecting disabled tenants.

Speaking at the Labour party conference in Brighton at the weekend, Miliband pledged to scrap the £470m tax, a move he said would be funded by closing “shady tax loopholes” and “tax breaks for hedge funds”.

Miliband said: “We will scrap the bedroom tax by abolishing the shady schemes of tax loopholes for the privileged few which the Tories keep inventing. Tax cuts for hedge funds, the billion pound black hole created with a scheme for workers to sell their rights for shares, and by tackling scams which cheat the taxpayer in construction.”

The “tax breaks for hedge funds” reference relates to the Schedule 19 tax paid by UK-based funds. Chancellor George Osborne announced plans to scrap the tax from next April in the Budget.

Schedule 19 is special stamp duty reserve tax applied to collective investment schemes such as unit trusts or open ended investment companies when investors sell their units and they are re-issued to new investors within a two-week period. The 0.5 per cent duty is paid by the fund manager rather than the investor.

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