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Finance Act 2014

Section 114: Abolition of Stamp Duty Reserve Tax on Certain Dealings in Collective Investment Schemes


1.This section abolishes the special stamp duty reserve tax (SDRT) charge on UK unit trusts and open-ended investment companies in Part 2 of Schedule 19 to the                 Finance Act 1999.

Details of the Section

2.Subsection (1) is the substantive repeal of the charging provisions.

3.Subsection (2) amends section 90(1B) of the Finance Act 1986 in two ways. Firstly, it restricts the scope of this subsection to in specie redemptions that are pro rata, meaning that non-pro rata in specie redemptions will no longer be exempt. Secondly, it defines the term “surrender” since the definition in Schedule 19 to the Finance Act 1999 is being repealed.

4.Subsection (3) makes consequential amendments to primary legislation.

5.Subsection (4) is the commencement provision. The abolition is effective from a Sunday so as to minimise any computational difficulties.

6.Subsection (5) allows consequential amendments to secondary legislation to be made with retrospective effect. This is to allow the amendments to secondary legislation to have the same effective date as the changes to primary legislation.

Background Note

7.There is a special SDRT charge (known as the “Schedule 19” charge) on UK unit trusts and open-ended investment companies. This is a 0.5 per cent charge on the value of surrenders, by investors, of units or shares in a fund to the fund manager, although this charge may be reduced in two different ways when the amount of tax is calculated. The tax is generally accounted for by the fund manager but ultimately borne by investors.

8.The Government announced at Budget 2013 that the Schedule 19 charge would be abolished in Finance Act 2014 as part of a package of measures to make the UK more attractive as a domicile for investment funds.

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