View more on these topics

MM leader: HMRC’s puzzling haste on rebates

HM Revenue & Customs’ decision to make rebates to investors taxable may have been expected by many since this paper wrote of the Government’s concerns in December.

But the speed at which the new regime will be introduced, in less than two weeks, has come as a surprise and presents plenty of logistical challenges.

From April 6 investors will be charged income tax at their marginal rate on any rebates from fund groups not wrapped in an Isa, Sipp or bond.

For basic rate taxpayers the tax will be taken from the payment while higher-rate taxpayers must account for the extra tax in their self assessment forms.

For the fund groups paying rebates, HMRC will allow for estimations on tax charges this year and it acknowledges that tax may have to be recovered later on early payments.

Most platforms have around 25 per cent of assets in unwrapped investments although some have much more. According to The Platforum, Cofunds had around 50 per cent of its assets unwrapped in November.

Skandia and Standard Life, two big players who had planned to retain a unit rebate model, are both reassessing their plans.

They are both exploring two options for reform- either asking fund groups for preferential share classes below the market average or offering lower rebates on clean share classes, where the tax hit would be less. Whether asset managers will play ball remains to be seen.

The ongoing flip-flopping from the regulator over the future of platform rebates over the past couple of years, and the growing prominence of platforms in financial services, inevitably drew the attention of the HMRC.

What is hard to understand is why HMRC did not look to introduce its tax regime in tandem with the regulator’s new platform rules, likely to come into force next Spring.

HMRC’s briefing note highlights that the FSA may make further rebate changes. It would have made much more sense, and probably saved firms a great deal of time and money, if the new tax and rebate regimes were introduced together.

It is also worrying that a Government department can introduce a new tax on investors without being able to supply an estimation on how much they are likely to pay.

Not for the first time, policymakers have not covered themselves in glory when it comes to overseeing such a vital part of financial services.



Incentive plan pushes Standard Life chief’s pay up to £5m

Standard Life chief executive David Nish saw his overall pay reach £5m for 2012, including £2.8m relating to the firm’s long-term incentive plan. Nish’s total pay for 2012 included a base salary of £775,000, a £1.2m annual bonus and £2.8m related to the group’s long-term incentive plan which is due to vest in June. Nish’s […]

BoI mortgage borrowers take legal action against rate hike

Almost 200 Bank of Ireland borrowers are considering legal action against the lender after it revealed it is more than doubling the rate on its tracker rate mortgages. In February, the bank said buy-to-let borrowers will see rates increase from 1.75 per cent above base rate to 4.49 per cent above base on 1 May. […]

House prices rise 1.2% quarter-on-quarter

The average house price rose 1.2 per cent between the fourth quarter of last year and the first quarter of 2013, according to the latest Halifax house price index. The average price in the first quarter was £163,488 compared with £161,454 over the last three months of 2012. This is the fourth consecutive quarter-on-quarter increase […]

UK policy: Kate Moss and short-termism

“Nothing tastes as good as skinny feels,” said supermodel Kate Moss, who is not often credited for her insights into policy making. Perhaps she should be. In politics, as in matters of diet, the course of action that is the best over the long term is often not the most desirable course of action in the short term. Add the instant gratification of the democratic electoral cycle and, instead of good policy making, you sometimes get the equivalent to a midnight binge in front of the fridge.

Read more

Important information

Investment risks

The value of an investment and any income from it can fall as well as rise and you may not get back the amount originally invested. Forecasts and past performance are not a guide to future performance. Some information and statistical data herein has been obtained from sources we believe to be reliable but in no way are warranted by us as to their accuracy or completeness. These are Neptune’s views and as such this document is deemed to be impartial research. We do not undertake to advise you of any change to our views.


News and expert analysis straight to your inbox

Sign up


There is one comment at the moment, we would love to hear your opinion too.

  1. Gill Cardy sumed it up very well in a different publication. She asked why the reabte was being taxed at all? After all it is simply a refund of overpayment of a product. If you buy a new car and you get £1000 cash back from the dealer or manufacturer this is not taxable and this is exactly the same thing – a refund of part of a charge. It is a ridiculous situation to be in.

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm