Calls to enhance savings and UK competitiveness in funds industry

In its pre-Budget representations the Investment Management Association has focused on two areas, calling for action to enhance pensions and savings and to optimise the competitiveness of the UK funds industry.

At a time when personal saving is becoming increasingly important IMA is urging the Government regularly to increase the limits for ISAs and CTFs at least in line with inflation. Linked to this, and coupled with the need to encourage not penalise personal saving, IMA has called on the Government to consider abolishing stamp duty, a tax which simply erodes the value of individuals' retirement and other savings, including in flagship Government schemes such as CTFs, ISAs, stakeholder pensions and the proposed new Personal Accounts.

Referring to a previously published report on the impact of taxation on the domicile of funds, IMA has stressed that business will continue to be lost to Dublin and Luxembourg and the opportunity for the UK to become a significant fund centre diminished, with the consequent loss of revenue for the Exchequer, unless action is taken to counter this. While progress is being made on Property Authorised Investment Funds, more can be done on a wide range of issues such as repeal of Stamp Duty Reserve Tax for funds and introducing certainty that the use of derivatives by Authorised Investment Funds will not be regarded as trading activity with a consequential tax charge. The previous Economic Secretary announced on 14 December 2006 that the Treasury would engage with IMA on these issues and a series of discussions has already taken place.

IMA has also called for amendments to measures affecting the efficient operation of authorised investment funds and the Offshore Funds regime.

Richard Saunders, Chief Executive of the IMA, commented: "It is crucial that the UK tax regime keeps up with changes to markets and investment practices so as not to disadvantage the industry or hinder the development of the UK as a global centre for asset management. We have had a refreshingly open dialogue with the Treasury and HMRC on these matters and hope to see to further progress in the PBR.

On stamp duty, the charge undermines Government policy by eroding the value of tax-incentivised saving, and eventual abolition needs to become an objective."