Wealth Manager - the site for professional investment managers

Register for full access to Citywire’s Fund Manager database, news and analysis. Registration is free and only takes a minute.

What impact will independence have on Scottish trusts?

What impact will independence have on Scottish trusts?

Assets worth £19 billion across 40 investment trusts are incorporated in Scotland and face several uncertainties if the country votes for independence in September.

Research by Winterflood has found 27 of those Scottish trusts are also managed in the country, including several of the largest closed-ended funds available (see table below).

The chairman of one Scottish incorporated trust has estimated that the costs of re-establishing in England would be several hundred thousand pounds, Winterflood analysts Innes Urquhart and Simon Elliott reported.

‘Understandably there are no obvious benefits to a move at this stage, given the costs involved and the prevailing uncertainty. However, we are sure boards affected will keep the situation under review,’ they commented.

‘Both boards and managers will need to ensure that shareholders’ interests are not disadvantaged by being incorporated in a jurisdiction that is less accommodating than the present regime.’

Urquhart and Elliott highlighted several issues for such trusts to consider:

* First, a new Scottish financial regulator could impose extra costs and burdens.

* Second, the preferential tax treatment trusts currently receive on capital gains could be removed.

* Third, a Companies Act rewritten for Scotland could change trusts’ ability to pay dividends out of capital or buy back shares.

* Fourth, in the event a board decided to move the trust’s registration, the administrative expenses and tax implications of winding up the Scottish company and incorporating a new one in England would have to be borne in mind.

Urquhart and Elliott acknowledged, however, that it was equally probable that a vote for autonomy could be beneficial for trusts.

‘Of course it is possible that an independent Scotland may prove a more welcoming regime for investment trusts, particularly in terms of tax treatment. This could see a growth in the sector there akin to that seen in the Channel Islands over recent years.’

The largest investment trusts incorporated in Scotland (Assets)
Aberforth Smaller Companies £1.2b
Alliance Trust £3.1b
Edinburgh Investment Trust £1.4b
Murray International £1.3b
Scottish Mortgage Trust £2.9b

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play Investment Pulse: the highs and lows of 2014

Investment Pulse: the highs and lows of 2014

This week's Investment Pulse looks back at some of the biggest stories of the year as well as looking forward to 2015.

Play Inside ETFs: Why the US bull-run still has legs

Inside ETFs: Why the US bull-run still has legs

Global equities suffered a sharp sell-off in the third quarter but exchange traded fund investors are continuing to back the US to outperform in 2015

Play Paul Niven: I won't rip up the Foreign & Colonial Trust history book

Paul Niven: I won't rip up the Foreign & Colonial Trust history book

The newly appointed manager of the Foreign & Colonial trust talks about his plans for UK's oldest investment company.

Your Business: Cover Star Club

Manchester wealth firm hires Coutts director for London launch

Manchester wealth firm hires Coutts director for London launch

Former Coutts director Tony Robinson has joined Chartered Wealth Management to head the company’s newly opened London office.

Wealth Manager on Twitter