Rebates reconsidered following tax ruling

Standard Life and Skandia may change their rebate models following the announcement by HMRC on Monday that platform rebates will be subject to income tax.

Rebates reconsidered following tax ruling


Standard Life is lobbying for a Standard Life-specific share class around 10 basis points cheaper than the 75 basis point industry average, and is encouraging other fund managers to launch their own cheaper share classes for large platforms.

Skandia, meanwhile, may move to cleaner share classes which typically have an annual management charge of 75bps, or alternatively provide access to more preferential share classes that do not pay a rebate but still reflect its scale.

The firm only changed its charging structures in December, and since January it has been paying fund manager rebates on investments.

Rebates on Collective Investment Schemes, insurance poilcies, or other investment products made by fund managers, fund platforms, advisers, or any other person acting as an intermediary between the fund and the investor will all be subject to income tax from 6 April, unless they are paid into a Sipp or an Isa.

Nail in trail commission’s coffin

Elsewhere, commentators have branded the ruling as ‘confusing for investors’.

In a statement released by TD Direct Investing, Stuart Welch, CEO, said: ““The reality is that trail commission rebates on funds are merely giving investors their own money back, in most cases.

"However, from 6th April, investors will find their rebate reduced by basic rate tax, currently 0.20%, while higher rate taxpayers will have to declare it on their tax returns – making clean funds even more attractive.”





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