The UK’s Association of Investment Companies has welcomed the announcement in Wednesday’s budget speech by Chancellor of the Exchequer Alastair Darling that venture capital trusts will be
The UK’s Association of Investment Companies has welcomed the announcement in Wednesday’s budget speech by Chancellor of the Exchequer Alastair Darling that venture capital trusts will be exempt from value-added tax on management fees from October 1 this year. The government also confirmed that investment trusts would be exempt from VAT on management fees.
‘We are delighted that the government has extended the VAT exemption on management fees to VCTs,’ says AIC director-general Daniel Godfrey. ‘This is a very welcome boost to the industry and VCT investors, who will benefit from this cost saving over the long term. It’s also good news for smaller companies, which will benefit from around GBP10m a year of added investment capital released by the exemption.’
This announcement follows the decision by the European Court of Justice in Luxembourg last year in the case brought by the AIC and JP Morgan Claverhouse that investment trusts are exempt from VAT.
‘We are also very pleased that the government has committed itself to considering our tax proposals, which, if enacted, would enable investment trusts to invest tax-efficiently in a wider range of asset classes,’ Godfrey says.
‘This would improve competition in the savings market by enhancing the attractions of investment trusts, which are savings vehicles with generally lower charges and better long-term performance than their peers.’
The Association of Investment Companies was founded in 1932 to represent the interests of the investment trust industry, the oldest form of collective investment. Today, the association represents a broad range of closed-ended investment companies, including investment trusts and VCTs. The AIC has 333 members and the industry has total assets of approximately GBP95bn.
