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IMA hits back at Labour plans to reintroduce fund tax
by Brian Cantwell on Sep 24, 2013 at 09:54
The Investment Management Association (IMA) has hit back at Labour plans to reintroduce Schedule 19 stamp duty reserve tax on funds.
The government announced the tax would be abolished in the Budget this year, but Labour pledged to reintroduce it at its conference this year, describing its withdrawal as a ‘loophole for hedge funds’.
IMA chief executive Daniel Godfrey (pictured) said that retail funds would be affected by the reintroduction.
‘Its reintroduction would impose a £145 million annual cost on the ordinary savers, investors and pensioners, who are the beneficiaries of its abolition. This tax is not paid by offshore funds that can be freely bought by UK citizens.
‘As a consequence of this ordinary UK citizens are being driven to invest through offshore financial centres. This unequal playing field has resulted in UK asset managers managing more assets in funds domiciled in Luxembourg and Dublin than in the UK.’
The IMA said it had conducted research with KPMG which calculated every £1 billion of funds domiciling in the UK would generate approximately £1 million of new tax revenues, including from job creation around the UK.
‘Given the fact that UK asset managers now manage over £700 billion in offshore funds, the amounts at stake are very important,’ said Godfrey.
‘Significant tax revenues are lost as a consequence of an uncompetitive playing field and the withdrawal of S19 SDRT is an important step in making the UK a competitive fund domicile once again.
‘At a time when it is so important that people save and invest, both for their old age and to provide the capital we need for economic growth, we should be seeking more ways to encourage them rather than the opposite.’
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