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Barclays Global Launches Tax Exempt US Equities Funds In UK

by Robert Lee, Tax-News.com, London

18 October 2004

Barclays Global Investors has launched two new pension fund pooling vehicles (PFPV) allowing institutional investors to achieve maximum tax relief from US dividend income within indirect funds, the firm announced last week.

British pension schemes have historically paid tax on US dividends at a rate of 15%. However, under the revised UK/US tax treaty, which commenced last year, full US dividend tax relief on direct US stock holdings was permitted by approved exempt pension schemes.

Of the two new funds, the Aquila US Equity PFPV is an index tracker, while the Ascent US Equity PFPV is a quantitative fund seeking to outperform an index through selective use of instruments.

Ian Simpson, client director at BGI, observed that:

"The status quo was unfair for institutions investing indirectly in US equities through pooled funds. The establishment of PFPVs for both our indexed and active equity products addresses this inequitable situation head on."

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