The Investment Management Association is calling for a 15 per cent simplified savings tax for investment funds.
It wants the Government to set one savings rate to apply to income, gains and all asset classes. At present, there are five existing and two potential tax regimes, with qualifying investor schemes and property investment funds due to be introduced. The IMA's radical proposals call for incentives to encourage savings. It wants to exempt lower-rate taxpayers, offer a tax-free allowance after which receipts are taxed at the single rate, continue Isa tax relief, and introduce a lower savings tax rate of 5 per cent.
IMA chief executive Richard Saunders says: “The time is right for a fresh and radical look at the savings landscape. Our proposals seek above all simplicity and clarity for investors. The Government is collapsing eight pension tax regimes into one and the same is possible for the taxation of funds.”
Isis Asset Management believes a simplified rate is workable but there could be a knock-on effect on investments outside the IMA's remit. It says onshore and offshore funds would be treated equally and offshore investments could be marketed more heavily in the UK. It says some form of exemption or tax-free savings would be needed on products such as Isas or they could become pro- hibitively costly for small investors who use the product for its capital gains tax exemption.
Isis director of communications Jason Hollands says: “There are clearly issues that require further examination. This merits serious consideration from policymakers.”