UK now a "serious contender" as a fund location

The Investment Management Association (IMA) welcomes regulations on UK authorised investment funds, published today, which introduce the Tax Elected Funds Regime and provide certainty that funds will be taxed as investing, not trading.

These changes, taken together with other recent changes to the UK fund tax regime, mean that UK funds can now:

Undertake a wide range of investment transactions with certainty of tax treatment;

Market competitively to UK and international investors;

Sell to sophisticated investors without being impeded by complex tax rules; and

Invest tax efficiently in property.

The recent changes to the law to allow the title to units and shares in funds to be transferred electronically further enhance the package of reforms by enabling the industry to develop more efficient settlement processes.

The work on a "protected cell" regime for open-ended investment companies is also welcome as it will protect investors in different sub-funds of an OEIC from the low risk of cross liability and also enhance the competitiveness of UK funds.

Julie Patterson, Director of Authorised Funds and Tax at IMA, said: "The statement that the ongoing strength of the asset management sector is a priority for the Government is very welcome. And IMA fully endorses the view that one of the most valuable outcomes of the joint working group on UK fund tax reform has been the improved consultation and strengthened trust between the industry and Government.

This package of reforms, coupled with the UK's fund regulatory regime, make the UK a serious contender as a fund domicile, for UK and overseas investors. And for UK investors in particular, authorised funds can now offer a tax-efficient vehicle for exempt investors, such as pension funds, charities and Child Trust Fund, ISA and SIPP investors."