For immediate release: Tuesday 8 December 1998

STAMP DUTY EXEMPTION EXTENDED

The Association of Unit Trusts and Investment Funds today welcomed the Government’s decision to continue the exemption from stamp duty on amalgamations of authorised unit trusts with open-ended investment companies ("OEICs"). Instead of expiring on 30 June 1999, it will continue for one year beyond the coming into force of the regulations allowing further categories of OEICs.

The exemption for mergers of authorised unit trusts will expire, as expected, on 30 June 1999.

Commenting, AUTIF’s Director General, Philip Warland, said:

"We are very pleased that the Government has recognised the need for a continuation of the exemption. We are also grateful to the Inland Revenue for its help. Fund management companies now know that they will be able to change their complete range of authorised unit trusts into OEICs, should they so wish, without fear of a stamp duty charge."

For further comment please contact:

Philip Warland Director General AUTIF 0171 831 0898
Anne McMeehan Director of Communications AUTIF 0171 831 0898
Christopher Brealy Taxation Adviser AUTIF 0171 831 0898

Notes for editors:

1. The details of the extension of the exemption are contained in an Inland Revenue press release dated today (copy attached).
2. AUTIF had lobbied for the extension of the stamp duty and stamp duty reserve tax exemptions for amalgamations of authorised unit trusts with OEICs due to the delay in OEICs 2. OEICs 2 is the legislation required to allow additional categories of OEICs, such as money market funds, to be set up. This will now be brought about by regulations under the forthcoming Financial Services and Markets Act which itself is unlikely to become law before 2000. Many managers have indicated that they are interested in changing their authorised unit trusts to OEICs but want to change their whole range at once. If the stamp duty exemption had expired before OEICs 2 was brought into force this would have been prevented.
3. An amalgamation is where more than one authorised unit trust is changed into a new OEIC (or sub-fund of an umbrella OEIC) or one or more authorised unit trusts are merged with an existing OEIC (or sub-fund of an umbrella OEIC).
4. Conversions of one authorised unit trust to one OEIC (or sub-fund of an umbrella OEIC) are exempt from stamp duty and stamp duty reserve tax without time-limit. This is unaffected by today’s announcement.
5. The exemption for mergers of two or more authorised unit trusts has not been extended and expires on 30 June 1990.