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Transatlantic tax deal for insured pension funds

Insured pension funds will no longer be taxed on dividend income from US equity holdings after the Inland Revenue struck a deal with the US authorities.

This means that most investment funds which insurance companies manage on behalf of pension trustees will receive dividends on US investments free of taxation. With-profits funds will still have to pay the tax but unit-linked pension policies and investments in Sipps will no longer be hit.

The withholding tax levied by the US government on dividends from US-listed companies was 15 per cent. The ABI has been lobbying the Govern-ment for several years over the tax. The UK Govern-ment continues to levy a 10 per cent tax on UK equity dividends earned by pension funds.

ABI director of financial regulation and taxation Peter Vipond says: “It will put most insured pensions on a par with stand-alone schemes in respect of US dividends and provide incentives to keep this growing business onshore in the UK. The third-party management of pension funds by insurance com- panies, including the ins- urance subsidiaries of fund managers is a growing business and a real area of success for the insurance industry.”


Test drive

Last week, I looked at the substantial non-trading activities test in relation to capital gains tax business assets taper relief. For those who are or may be considering selling their shares in a private trading com- pany, this relief represents a massive improvement in the net return they would otherwise receive.

‘Tories would not lift markets more than Labour’

A Tory Government would not lift markets more than Labour despite the party’s allegiance to the investment community, say roadshow panellists. In some general elections, investment professionals have been vocal in their support of the Tories but panellists said investors would not be affected positively or negatively by a change of Government. Invesco Asset Management […]


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