Press Release

IMA WELCOMES CONTINUED IMPROVEMENT TO THE COMPETITIVENESS OF UK AUTHORISED FUNDS

12 March 2008

The Investment Management Association (IMA) welcomes today's budget announcements which will further enhance the UK's competitiveness as a domicile for authorised investment funds.  The Chancellor has recognised the importance of working collaboratively with the asset management industry and has introduced a series of measures.  Specifically, the Government has announced:

The launch of a new tax regime for Property Authorised Investment Funds which will ensure that for non-tax paying investors such as pension funds, charities and ISA investors there will be no tax on rental income paid by the fund.
New rules to facilitate the development of "Funds of Alternative Investment Funds" which will enable UK authorised funds to be invested in a wider range of underlying funds, with appropriate investor safeguards.
Further work with the industry on reform of the SDRT Schedule 19 regime, which gives rise to an additional, fund-specific charge for authorised funds.
Consideration of full tax exemption for authorised funds so that tax is not paid at both fund and investor level but is paid only at the point of distribution as if the investors had held the fund's assets directly.
Simplification of the "substantial holding" rule for Qualified Investor Schemes (QIS). These are funds designed for institutional and sophisticated investors and the rule gives rise to unnecessary operational and compliance costs, making QIS an unattractive vehicle for the industry and investors.
The Budget also includes reform of the Offshore Funds regime, final regulations to allow electronic settlement of fund units and a number of other technical measures for which the IMA has been lobbying.

Julie Patterson, IMA's Director, Authorised Funds & Tax, said:

"This package of measures will further enhance the ability of UK authorised funds to compete on a level playing field with funds from other domiciles by removing some of the barriers to product development and sales outside the UK.  Our constructive dialogue with the authorities has allowed us to develop a shared understanding of the issues and to continue to develop a programme for change."