As part of the 2010 Budget the UK Government has announced that it will consider various reforms to the UK tax rules applicable to investment funds. The Government is to:

  • Work with industry to ensure that the stamp duty reserve tax rules relating to investment funds apply to investments in underlying funds if they are themselves mainly invested in UK equities. HM Revenue and Customs will with work industry to include as exempt investment for these purposes certain investments by a CIS in another CIS;
  • Consult on whether it would be beneficial for the UK to establish a tax-transparent contractual fund vehicle;
  • Work with industry to address issues for authorised investment funds investing more than 20% in both reporting and non-reporting offshore funds;
  • Review the tax rules on investment trusts with a view to modernising them. A consultation paper is to be issued in the summer;
  • Make changes to the draft legislation on unauthorised unit trusts issued in November 2009 with the aim of blocking certain tax avoidance schemes;
  • Seek to support the work of the corporate bond market industry to improve bond market access for more issuers, including by better adaptation and standardisation of bond documentation and better market information flows; and
  • Evaluate the feasibility of a sterling-denominated private placement market.