FUND managers welcomed proposals by the Investment Management Association (IMA) for a single savings tax of 15 per cent, in the hope that simplifying the raft of tax rules on funds will encourage more people to save.
The IMA called on the Treasury to scrap the five different tax regimes that govern investment funds and the six rates of tax paid by investors, in favour of a flat 15 per cent tax on all gains realised by investors and a simplified, low-tax structure for funds.
“There are confetti showers of tax statements that fund managers send out to investors,” Richard Saunders, chief executive of the IMA, said. “The complexity of the regime is a disincentive to save.”
Gary Shaughnessy, chief executive of retail at M&G, described the IMA’s suggestion as a “great step forward”.
He said: “The issue is about making saving more attractive and simplification has to decrease confusion and provide an incentive to save.”
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Isis Asset Management agreed with the plan, saying that a simplified savings tax would be an “easily identifiable benchmark of the Government’s real commitment to encourage saving”.
Under the present system, investors make a profit of £4.9 billion every year by selling units in funds and pay £730 million in tax on their haul. A 15 per cent tax would give the Treasury the same amount of tax, Mr Saunders said.
A Treasury spokeswoman said that the department did not comment on individual proposals put forward by interest groups. But Mr Saunders said the Treasury had indicated a “very strong appetite for change” in discussions with the IMA.
The IMA also proposed that reinvested income be rolled up gross and that cash funds be treated the same as bank deposits.