On 27 July 2010, the UK Government published a Consultation Document setting out proposals for the modernisation of the UK tax treatment of approved investment trust companies (ITCs). At the same time, consequential changes to the UK company law rules applying to investment companies were tabled.
The ITC tax rules have been little changed since their introduction in 1965 and the proposals were broadly positive and went some way to widening the permitted investment strategies for ITCs, increasing certainty of tax treatment for ITCs and investors alike and reducing the administrative burdens imposed upon approved ITCs.
A further document published by the Government in December 2010 addressed a number of the key concerns raised by the industry in response to the initial proposals. As a result we expect the new regime to make the ITC vehicle more attractive as a means of collective investment for a number of key investment strategies. At the time of writing it is expected that the new regime will come into force in late 2011 or early 2012.