Speaking at the Association of Investment Companies annual conference for directors today, Myners said the relative tax inefficiency of bond investments for investment trust companies had been a long standing issue and, subject to responses to a consultation document, the Government intended to include powers in the Finance Bill 2009 for changes to legislation.
He said the Government announced its intention to act in last year’s Budget following response to the AIC’s report on the current framework.
Investment trusts pay corporation tax of up to 30 per cent on bond income, whereas unit trusts and OEICS pay just 20 per cent putting them at an immediate advantage.
He said: “We consulted in July 2008 on a framework to allow UK-based investment companies to invest tax efficiently in bonds and other interest producing assets and to ensure that investors continue to choose their investments for commercial rather than tax reasons.
“Of course I can’t pre-empt the Budget announcement tomorrow but the consultation document stated, subject to the responses the Government intends to include powers in the Finance Bill 2009 to legislate for draft regulations and for these to have effect as soon as possible after the bill is granted royal ascent.”