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Press Release

Wednesday 28 April 2010


The UK is now a competitive fund domicile, offering all types of investors a wide range of well-governed, well-managed and tax-efficient funds.

Recent and significant changes to both legislation and the approach of the UK authorities have reversed the previously widely-held view that the UK is not attractive as a fund domicile.  And there are further positive developments under discussion. 

Julie Patterson, Director, Authorised Funds & Tax at the Investment Management Association (IMA), confirmed today, 28 April, in her keynote speech at the 3rd Annual Global Financial Services Centre Conference in Dublin:

"The UK's tax regime for authorised funds was unnecessarily complex.  Tax-paying investors pay the same amount of tax as if they had invested direct, but tax-exempt investors (such as pension funds, charities and ISA investors) could not recover the tax paid in the fund.  Also, there was concern about the lack of consultation, trust and understanding of and between the funds industry and government officials.  This is no longer the case.

"There have been significant changes to legislation, including the introduction of tax-efficient securities and property funds, certainty that authorised funds are taxed as investing not trading (so that their capital gains tax exemption is secure), and a workable regime for institutional funds.

"There is a new dialogue with and approach to the industry by government officials, with open consultation and a refocusing of expertise into dedicated policy and operational teams. Firms that have engaged in discussions with officials over the past year or so have commented very positively on the new approach.

 "Moreover, there is also now parity of treatment of distributions from UK and offshore funds, and an easing of the fund-specific Stamp Duty Reserve Tax regime.  The UK's extensive double tax treaty network continues to enable authorised funds to secure treaty benefits, which is an advantage over other fund domiciles and benefits investors in improved returns. And there are further improvements under discussion, including the introduction of tax-transparent contractual funds, an onshore hedge fund regime and in relation to funds investing in other funds.

"For the consumer, the UK's unique requirement for complete independence of the Manager and the Depositary, which performs an active oversight role by qualified staff, has proven to provide a robust governance framework.  It has stood the test of the Credit Crunch."



Notes to the Editor

1.         Master-feeder structures

The revised UCITS Directive will for the first time allow "master-feeder" structures to be introduced as an alternative to merging fund ranges. "Feeder" funds in different domiciles would invest in the same "master" fund, thus allowing a single portfolio of assets to be offered in multiple jurisdictions and for different types of investors.

2.         Stamp duty on funds - Stamp Duty Reserve Tax (SDRT)

It is difficult to persuade continental European investors to invest in a UK fund in preference to funds elsewhere when UK funds pay a unique type of tax. It has a ‘headline' rate of 0.5% and so appears onerous, even though in practice the cost is on average 5 basis points per annum and is therefore broadly comparable with charges faced elsewhere. Its complexity as well as its headline rate are both disincentives to invest in UK funds.

3.         Tax revenues

With fund domicile go various administrative and professional jobs associated with operating funds. Research by KPMG and IMA showed that for every £1 billion of funds domiciled offshore instead of in the UK, the Exchequer has been losing out on nearly £1 million in business and employment taxes.

For further information, please contact:

Michèle Lunt, Press Officer, IMA, 020 7831 0898
Ginny Broad, Head of Communications, IMA, 020 7831 0898 or 07834 089332


A photograph and a copy of Julie Patterson's presentation can be obtained from the IMA Press Office.

About the Investment Management Association
The IMA is the trade body for the UK's £3 trillion asset management industry.  The money its members manage is in a wide variety of investment vehicles including authorised investment funds, pension funds and stocks and shares ISAs.  Its role is to represent the industry and promote high standards.

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