The Association of Investment Companies has urged the Treasury to scrap stamp duty for investment trusts to “level the playing field” with open-ended funds.
Responding to the Treasury’s review of the UK funds regime, the trade body said it had called on the Treasury to remove stamp duty and stamp duty reserve tax on purchases of investment trust, investment company Reit and VCT shares.
AIC chief executive Ian Sayers (pictured) noted since 2014 most open-ended funds have been exempt from stamp duty, so cutting the tax for closed-ended structures would “level the playing field” between the two.
Sayers said investment trusts, investment company Reits and VCTs already pay stamp duty, SDRT or stamp duty land tax when they purchase their underlying investments, so levying stamp duty again when investors buy their shares leads to double taxation.
“There is no policy rationale for this difference as investment companies and open-ended funds serve the same investor need,” he said. “It is time that this distortion is addressed.”
Sayers added: “UK policy has traditionally ensured a neutral tax position for the end investor, so that an investor in a collective fund will be in a similar tax position as if they had invested in the fund’s underlying assets directly.
“Removing stamp duty on purchases of investment trusts, investment company Reits and VCTs will create a fair tax position for investors and maximise competition in the public interest.”
Last month Sayers revealed he would be stepping down as chief executive of the AIC later this year after more than a decade in the role.
