Asset Management

HM Treasury

UK funds regime - HM Treasury publishes summary of responses to call for input - 10 February 2022

HM Treasury has published the summary of responses (the Summary) to its January 2021 call for input in relation to the government’s review of the UK funds regime (the Review). The Summary outlines the feedback received on the call for input, the Treasury’s conclusions and which measures will be progressed or explored further. Overall, the Summary highlights that respondents were supportive of the scope and ambition of the call for input.

As previously reported in this Bulletin, the government announced the Review at Budget 2020 to consider tax and relevant areas of regulation. The call for input set out the scope and objectives of the Review and invited stakeholders to provide views on which reforms should be taken forward and how these should be prioritised. As part of the Review, the FCA has introduced rules for Long-Term Asset Funds (LTAFs) and the government has included legislation for a new tax regime covering Asset Holding Companies in the Finance Bill 2021-2022.

The Summary sets out the further steps the government, and the FCA, intend to take, including to:

• make the taxation of funds simpler and more efficient, including in relation to the genuine diversity of ownership requirement, Real Estate Investment Trusts and solutions to deal with the tax efficiency of multi-asset authorised funds;
• expand the range of investment products available in the UK, including in relation to authorised fund structures that are permitted to distribute capital, and a new type of fund structure - an unauthorised contractual scheme - aimed at professional investors;
• explore opportunities to support the wider funds environment, including by providing additional information on the fund authorisation process and by promoting the UK funds regime abroad;
• consult on options to simplify the VAT treatment of fund management fees; and
• continue ongoing work to facilitate the rollout of the LTAF, including: (i) the continued work of the Productive Finance Working Group; (ii) a planned FCA consultation on potentially changing the restrictions on the promotion of LTAFs to allow distribution to a broader range of retail investors; and (iii) continued assessment of the case for any further changes to the way LTAFs are taxed.

The government welcomes further representations from industry.

HM Treasury: Review of the UK funds regime: a call for input: Summary of responses

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