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Hargreaves launches legal challenge on HMRC rebate tax


Hargreaves Lansdown has launched a legal challenge against HM Revenue & Customs’ decision to apply tax to platform rebates.

HMRC announced in March that rebates from unwrapped investments were liable to a tax charge because they qualify as annual payments and imposed the interpretation from 6 April. 

Hargreaves chief executive Ian Gorham says the firm was told its rebates were not subject to tax because it was defined as a refund of charges. Hargreaves refers to its rebates as “Loyalty bonuses”.

He says: “When we introduced loyalty bonuses we consulted on its tax position and it was clear, as a refund of charges, it should not be subject to taxation.” 

The firm said in a statement that it would continue to pay rebates, net of any provision for a income tax and said that it would add the provision back into client accounts if the challenge was successful.

Money Marketing revealed in March the Tax Incentivised Savings Association had written to Treasury economic secretary Sajid Javid in an attempt to delay the implementation of HMRC’s taxation on platform rebates until April 2014.

The Government dismissed the appeal and imposed the tax charge on 6 April as it originally intended.

In June, HMRC issued further guidance which confirmed payments from fund managers to life companies will not be taxable, stating they are not “pure income profit” when paid to a provider.

The guidance also confirmed any trail payments made to advisers will not be eligible for income tax, but if payments are passed to clients then tax will apply.

Also in June, a further HMRC clarification amended legislation to remove capital gains tax charges when selling down bundled assets to move into the clean version of the same fund.


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  1. Waste of time and money as if they win their case the government will simple amend the tax law!

    Its still a rebate you can call it what you like.

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