PRE-BUDGET RESPONSE: IMA WELCOMES FURTHER COMMITMENT TO FUND TAX REFORM

The Investment Management Association (IMA) welcomes today's pre-Budget announcements which will further enhance the UK's competitiveness as a domicile for authorised investment funds. Specifically, the Government has announced:

• Replacement of the "substantial holding" rule for Qualified Investor Schemes (QIS) from 1 January 2009 with a workable "widely held" requirement. QISs are funds designed for institutional and sophisticated investors and the current rule gives rise to unnecessary operational and compliance costs, making them an unattractive vehicle for the industry and investors.
• Amendments to the tax regime for Property Authorised Investment Funds from 1 January 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.
• HMT'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 & 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 time-table."

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About Investment Management Association (IMA)
IMA is the trade body for the UK's £3.4 trillion asset management industry. The money its members manage is in a wide variety of investment vehicles including authorised investment funds, pension funds and stocks and shares ISAs.  Its role is to represent the industry and promote high standards.

For further information, please contact:
Noreen Shah, Press Officer, IMA, 020 7831 0898