Tax rules put funds in invidious position
The “look through” measures in the proposed new tax regime, which seek to tax investors at their marginal tax rate, are dependant on the fund becoming a ‘qualifying collective investment vehicle’ (QCIV) – as are the other tax benefits in the package.
The costs of complying with becoming a QCIV are not likely to be small to a scheme, she says.
“The government has really made an effort not to be straightforward about this,” Spooner says.
“It was never clear that these two changes are linked.”
The proposals mean that existing schemes will have to choose between whether becoming a QCIV – and taxing all members at their marginal rate – or remaining as they are, which means all investors are taxed at the higher rate of 33%.
“It puts the trustees of the existing schemes in an extremely invidious position. They will either have to say to their lower paid members, ‘sorry you are going to be taxed at a the higher rate’ or say to all members that the costs will be higher.”
