Budget 2013: Schedule 19 consigned to obscurity

Edinburgh had a name check from the Chancellor when he mentioned the abolition of an obscure tax that will benefit asset managers to the tune of £600 million over the next five years.

Schedule 19 was a UK-only tax on funds which put British asset managers at a distinct disadvantage to their counterparts in Dublin and Luxembourg.

The Investment Management Association (IMA) welcomed the Chancellor’s backing, as well as its plans to introduce a marketing body for the sector – the Financial Services Trade and Investment Board (FSTIB).

IMA chief executive Daniel Godfrey said: “Today’s abolition of fund-specific stamp duty is a vital first step. Not only does it reduce costs for savers and so
ensures better long-term returns, but it makes the UK tax regime more competitive as a domicile for funds that can be sold internationally.

“If we all follow through on this very encouraging start and build a truly competitive tax and regulatory regime with sustained and authentic marketing and promotion, the asset management sector could, over time, create thousands of support jobs around the UK and generate hundreds of millions of pounds of additional tax revenues.”

Scottish Financial Enterprise (SFE) reported that funds under management in Scotland now stand at approximately £750
billion.

The largest managers include Aberdeen Asset Management – which sponsors the Cowes Week regatta on the Isle of Wight – and Standard Life
Investments.

Owen Kelly, chief executive of SFE said: “Scotland is a leading international centre for asset management – the fourth largest in the EU.

“The tax changes announced today, coupled with a much keener focus on how we compete for business internationally, should encourage more
jobs and, in time, further growth.”

He added that the changes could also boost Scotland’s
“already very successful asset servicing sector”.