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AIC welcomes new source of demand for non-UK investment companies and UK REITs

25 January 2018

Changes to UK tax rules allow non-UK investment companies and UK REITs (Real Estate Investment Trusts) to be held tax-efficiently in insurance wrappers.

The Association of Investment Companies (AIC) has welcomed changes to UK tax rules which will allow investment companies based outside the UK and UK REITs (Real Estate Investment Trusts) to be held tax-efficiently in insurance wrappers.

Ian Sayers, Chief Executive of the Association of Investment Companies said: “This change was a priority for the industry, so it is very pleasing to see it become a reality.  Advisers and wealth managers have indicated that they would like to be able to access non-UK investment companies and UK REITs via these wrappers to help diversify their client portfolios and take advantage of investment companies’ strong performance and income opportunities. This change could potentially open up a significant source of demand for these companies.”

Further information

The new law came into effect on 1 January 2018 and the accompanying guidance has recently been published. The rule change means non-UK investment companies and UK REITs can now be held in a life insurance wrapper, namely, life insurance and capital redemption policies and life annuity contracts, without it becoming taxable as a personal portfolio bond. 

Such wrappers are commonly used by financial advisers and wealth managers for their clients.  In the past, UK based investment trusts were eligible for inclusion but now non-UK investment companies and REITs can also be included in these wrappers.

All non-UK investment companies, with shares traded on the main market of the London Stock Exchange, including the Specialist Funds Segment, and UK REITs can now be held in tax-efficient insurance policies.  Non-UK companies traded on AIM will not be eligible for inclusion in insurance wrappers but UK REITs listed on AIM will be eligible.

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Notes

  1. The Association of Investment Companies (AIC) was founded in 1932 to represent the interests of the investment trust industry – the oldest form of collective investment.  Today, the AIC represents a broad range of closed-ended investment companies, incorporating investment trusts and other closed-ended investment companies and VCTs.  The AIC’s members believe that the industry is best served if it is united and speaks with one voice. The AIC’s mission statement is to help members add value for shareholders over the longer term. The AIC has 347 members and the industry has total assets of approximately £174 billion.
  2. Disclaimer: The information contained in this press release does not constitute investment advice or personal recommendation and it is not an invitation or inducement to engage in investment activity. You should seek independent financial and, if appropriate, legal advice as to the suitability of any investment decision. Past performance is not a guide to future performance.  The value of investment company shares, and the income from them, can fall as well as rise.  You may not get back the full amount invested and, in some cases, nothing at all.

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Annabel Brodie-Smith
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