The Chancellor announced today in his Budget Report that HMRC will work with the industry to amend the fund-specific Schedule 19 Stamp Duty Reserve Tax regime. The tax affects only UK-authorised funds and is in addition to SDRT paid on funds' acquisitions of UK equities. In particular, it is currently paid by UK funds investing in other funds, even where those other funds are not invested in UK equities. It is this element of the tax that is to be removed, which will enable UK-domiciled funds to compete on a level playing field with offshore funds.
The Government has also announced that it intends to launch a working group to consult with industry on whether to establish a tax-transparent contractual fund vehicle and that it will continue to work with us to refine the new regime for funds invested in non-reporting offshore funds.
Commenting on these announcements, Julie Patterson, Director of Authorised Funds & Tax at the Investment Management Association, said:
"We welcome this news. The amendment of Schedule 19 SDRT will remove a current unfairness. This, coupled with the introduction of tax-transparent contractual funds, will enable the UK to compete as a domicile for the new UCITS master-feeder structures and for hedge funds coming onshore. It follows on from improvements to the UK's fund tax regime that IMA has secured over the past few years, including certainty that funds will be treated as investing not trading, tax-efficient regimes for securities and property funds, and a workable regime for institutional funds. The more funds that chose to domicile here rather than offshore, the more business and employment taxes are received by the UK Exchequer. Today's announcements are therefore good news for the competitiveness of the UK funds industry and for the UK.
We also welcome the Government's commitment to further discussion on reforms of Schedule 19 SDRT. We shall continue to argue for its complete abolition, because it is an additional tax on ordinary UK savers."
The Government has also announced that it intends to launch a working group to consult with industry on whether to establish a tax-transparent contractual fund vehicle and that it will continue to work with us to refine the new regime for funds invested in non-reporting offshore funds.
Commenting on these announcements, Julie Patterson, Director of Authorised Funds & Tax at the Investment Management Association, said:
"We welcome this news. The amendment of Schedule 19 SDRT will remove a current unfairness. This, coupled with the introduction of tax-transparent contractual funds, will enable the UK to compete as a domicile for the new UCITS master-feeder structures and for hedge funds coming onshore. It follows on from improvements to the UK's fund tax regime that IMA has secured over the past few years, including certainty that funds will be treated as investing not trading, tax-efficient regimes for securities and property funds, and a workable regime for institutional funds. The more funds that chose to domicile here rather than offshore, the more business and employment taxes are received by the UK Exchequer. Today's announcements are therefore good news for the competitiveness of the UK funds industry and for the UK.
We also welcome the Government's commitment to further discussion on reforms of Schedule 19 SDRT. We shall continue to argue for its complete abolition, because it is an additional tax on ordinary UK savers."
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