The Investment Management Association (IMA) has welcomed Monday's pre-budget announcements which will further enhance the United Kingdom's competitiveness as a domicile for authorised investment funds.
The government announced that the "substantial holding" rule for Qualified Investor Schemes (QIS) will be replaced from January 1, 2009 with a workable "widely held" requirement.
QISs are funds designed for institutional and sophisticated investors and, according to the IMA, the current rule gives rise to unnecessary operational and compliance costs, making them an unattractive vehicle for the industry and investors.
Another change announced on Monday was an amendments to the tax regime for Property Authorised Investment Funds, also from January 1, 2009, to facilitate convergence of existing funds and new funds. In particular, there will be no double Stamp Duty Reserve Tax (SDRT) charge for corporate investors.
The IMA also welcomed the Treasury's commitment to consider providing legislative certainty that funds will be treated as investing not trading, which will provide certainty of their tax treatment.
The report does not include specific announcements on "tax elected funds", the offshore funds regime or the fund-specific SDRT regime. However, IMA is working closely with officials on these issues and expects further announcements shortly, with legislation to follow next year.
Julie Patterson, IMA's Director, Authorised Funds and Tax, said: "Today's announcements further prove the government's commitment to enhance the competitiveness of UK authorised funds. In isolation each of these measures represents a specific technical change or changes, but when viewed as a package, they have the potential to reform the UK fund landscape. We shall continue to work closely with officials to ensure delivery against the legislative timetable."
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