UK NOW A "SERIOUS CONTENDER" AS A FUND LOCATION FOLLOWING BUDGET REFORMS

The Investment Management Association (IMA) welcomes regulations on UK authorised investment funds, published today, which introduce the Tax Elected Funds Regime and provide certainty that funds will be taxed as investing, not trading.

These changes, taken together with other recent changes to the UK fund tax regime, mean that UK funds can now:

• Undertake a wide range of investment transactions with certainty of tax treatment;
• Market competitively to UK and international investors;
• Sell to sophisticated investors without being impeded by complex tax rules; and
• Invest tax efficiently in property.

The recent changes to the law to allow the title to units and shares in funds to be transferred electronically further enhance the package of reforms by enabling the industry to develop more efficient settlement processes. 

The work on a "protected cell" regime for open-ended investment companies is also welcome as it will protect investors in different sub-funds of an OEIC from the low risk of cross liability and also enhance the competitiveness of UK funds.

Julie Patterson, Director of Authorised Funds and Tax at IMA, said:

"The statement that the ongoing strength of the asset management sector is a priority for the Government is very welcome.  And IMA fully endorses the view that one of the most valuable outcomes of the joint working group on UK fund tax reform has been the improved consultation and strengthened trust between the industry and Government. 

This package of reforms, coupled with the UK's fund regulatory regime, make the UK a serious contender as a fund domicile, for UK and overseas investors.   And for UK investors in particular, authorised funds can now offer a tax-efficient vehicle for exempt investors, such as pension funds, charities and Child Trust Fund, ISA and SIPP investors."

The HM Treasury publication "Enhancing the competitiveness of UK funds" can be found here.

-ENDS-

Notes to Editors

1.  The Treasury publication sets out the package of tax and regulatory changes that have been made over the last 2 years following close consultation with industry.

This paper also delivers on the Budget 2009 announcements by providing further policy details and draft regulations for consultation on: 

• launching a new Tax Elected Fund regime to enable Authorised Investment Funds (AIFs) to market themselves more competitively; and
• legislating to clarify whether certain transactions will be tax as trading or investment for UK AIFs.

2.  An IMA/kpmg report in 2006 made a number of recommendations about taxation and the competitiveness of UK funds.  The PR and report can be found here.

3.  About Investment Management Association (IMA)
IMA is the trade body for the UK's �3.4 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.

For further information, please contact:

Mona Patel, Head of Communications, IMA,  0207 831 0898
Out of hours, 07834 089332