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HMRC eyes tax clampdown on platform rebates

by Jun Merrett on Jan 22, 2013 at 18:31

HMRC eyes tax clampdown on platform rebates

HM Revenues and Customs (HMRC) has said it is examining the tax status of platform unit and cash rebates to investors.

A spokesman said the Revenue had been alerted to the issue and wanted to ensure rebates were being taxed correctly.

'The tax status of regular payments by platforms to investors under current legislation has been raised with HMRC and we are considering whether the correct tax treatment is being applied by the platforms and the recipients of such payments,’ he said.

While platform cash rebates are set to be banned from 31 December, platforms will still be able to pass on unit rebates from fund managers to investors. When the cash rebate ban was first announced, platforms warned the move to unit rebates could create a taxable event.

With fund managers creating rebate-free clean share classes under the retail distribution review, many platforms have committed to moving away from rebates for the majority of their business.

Skandia has been the most vocal in its support of a unit rebate model, claiming that it will enable them to secure a better deal for investors.

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4 comments so far. Why not have your say?

Simon p via mobile

Jan 22, 2013 at 18:56

This wouldn't impact pensions and ISAs which is a huge proportion of the platform business. Don't really understand the logic of taxing rebates though - it isn't income it's a rebate of charges. Also if they tax unit rebates the investor would potentially get taxed again when they disinvest the units. Another example of HMRC not understanding platforms ( as well as the FSA)

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phil castle via mobile

Jan 22, 2013 at 21:57

I think I agree with Simon, but interested to hear Stankey Kirk's opinion.

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Richard Moore

Jan 23, 2013 at 09:16

How does one "disinvest" units?

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Michael Brown

Jan 23, 2013 at 10:10

I agree with both Simon and Phil.

"Oh my God" starting to sound like Gordon Brown - pass me a stiff Vodka, quickly please.

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