The trade body says the proposals will close the gap between UK authorised investment funds and offshore funds and help the UK to compete more effectively with other offshore jurisdictions.
Under new guidelines, investors would pay the correct amount of tax on distributions and exempt investors, such as pension funds, charities and Sipp and Isa investors, would no longer be subject to tax at the fund level that they cannot recover. Individual UK taxpayers would not be affected by the changes.
IMA also supports the Treasury’s proposal to replace the Qualified Investor Scheme 10 per cent substantial holding rule with a ‘genuine diversity of ownership’ condition to deliver the underlying policy intent.
The association continues to lobby for the abolition of Schedule 19 stamp duty reserve tax on fund units on grounds that it is onerous to administer, unique to UK funds and raises minimal tax revenue. It is also calling for greater certainty that funds will be treated as investing not trading, for tax purposes.
IMA director of authorised funds and taxation Julie Patterson says: “HM Treasury’s consultation is good news as the proposals would bring UK funds a significant step closer to allowing them to compete with offshore domiciles. In particular, these proposals coupled with replacement of the QIS 10 per cent rule should make it more attractive to establish authorised funds for institutional investors in the UK.”