IMA calls for two measures to improve UK competitiveness

3 February 2010

The Investment Management Association (IMA) is calling on the Government to make two practical changes which could help improve the competitiveness of the UK funds industry, in its representations for the 2010 Budget.

• The abolition of stamp duty on funds would enable the UK to compete on equal terms with other EU countries
• The introduction of a new type of fund structure called a ‘contractual fund' would bring new opportunities for UK fund managers and investors.

Richard Saunders, Chief Executive of the IMA, sets out the two issues:

"We are calling on the Government to abolish stamp duty on funds in the next Budget. This tax, which is unique to the UK, cuts against the principle of an equal EU marketplace. Its complexity and apparent expense make it less attractive to invest in UK funds than in those from other member countries. Abolition would stem further outflows and could bring in increased business and tax revenues.

"We are also asking the Government to enable the Financial Services Authority to authorise a new type of fund structure called a contractual fund. This will allow the UK to compete effectively when the new UCITS IV Directive comes into force. It would give out a strong signal that the UK is serious about providing cross-border funds - and would deter business from going to other EU countries.

"The UK asset management industry is in a strong position to attract new business, as it has the skills and resources to do so. For every £1 billion of funds that domicile abroad, we stand to lose around £720,000 in employment and corporation taxes. These two changes would both prevent further losses and provide further opportunities."

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