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Simplification set for investment tax

The Government is aiming for a radical reform of investment trusts and Oeic investments in an overhaul of the investment sector on a par with the pension revolution.

The Treasury says about 2tn of household assets held in pooled investments could benefit from the simplification and modernisation of their taxation and it is inviting industry views.

The IMA, in its Investing In Savers document, called on the Government to consult on the issue when it was first mooted in last year’s pre-Budget report.

It suggested four reforms to taxation on investments – exemption for non-higher-rate taxpayers, a single composite rate of tax, a tax-free allowance or a lower savings tax rate of 5 per cent applied to everybody.

Royal London head of corporate affairs Gareth Evans welcomes the drive for simplification. He says: “Reforming the taxation of pooled investments will de-risk advisers from giving advice and might restore investor confidence in savings. The plethora of tax schemes is currently confusing for both advisers and clients but there is now the potential for the Government to create an easily understandable tax regime.”

Clerical Medical head of industry affairs Nigel Stammers says: “The danger of this is that it just looks at the pooled fund market and not the whole life insurance market. Life bonds, for example, would not be inc-luded in any review. It is likely to create further distortions in the market.”

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