The chancellor praised the “world-beating” asset management industry based in London and Edinburgh but warned it was losing business to other places in Europe.
To help reverse this decline he said the schedule 19 stamp duty reserve tax regime would no longer be applied to UK Oeics from April 2014.
The move will cost the government approximately £600m over four years, according to the full Budget report on the Treasury website. Presumably this same amount will be saved by investors because of the initiative.
The tax was introduced in 1999 to take into account dealing in funds. Fund managers will still pay stamp duty on the trade of the underlying UK shares but investors trading units or shares in the funds will no longer be hit.
Osborne’s report said Schedule 19 had been consistently cited by the industry as one of the chief obstacles to establishing new funds in the UK.
Rob Mellor, PwC asset management partner, said: "This is something that the industry has been requesting for some time. It is great news for the UK asset management industry as it levels the playing field with other European fund locations and should help to encourage more UK and non-UK asset managers to launch UK based fund products."
