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Standard Life Wrap looks at charging changes after HMRC rebate news

Standard Life head of platform propositions David Tiller

Standard Life Wrap is considering changing its rebate model following HM Revenue and Customs’ announcement that platform rebates will be taxed.

HMRC confirmed in a briefing note yesterday that rebates paid from 6 April, associated with unwrapped investments, will be taxed.

Standard is currently exploring two approaches. One approach could see it ask fund managers for preferential share classes, possibly 10 basis points lower than the rest of the market, to reflect the price of the fund previously with a rebate passed to the client.

It is also considering using clean share class prices, with a rebate of between 10 and 15 basis points which would be subject to tax.

Standard Life head of platform propositions David Tiller says: “We are disappointed to hear that HMRC has announced it intends to tax fund rebates. We wrote to HMRC outlining concerns with this position earlier this year.

“The enhanced rebates we pay are between 5 and 25bps better than standard terms – in some cases the value of this rebate will be diminished by 40 or 50 per cent which will mean a material increase to the cost of investing.”

Following yesterday’s announcement, Skandia also said it is considering similar changes to Standard Life.

Skandia says it is considering moving to a 75bps share class with a taxed rebate back as even with a taxed rebate it still results in a better deal for clients.

It is also exploring the possibility of preferential share classes that do not pay a rebate but still reflect the firm’s scale.


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  1. The challenge for these guys is that they don’t want to publicise the actual cost of the fund to them, as this is commercially sensitive. The present system allows companies like SL to “hide” the actual cost and maintain a decent margin. If they maintain a taxed rebate then this is more straightforward, as SL may need too many share classes to accommodate all the different charging structures for different clients.

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