Landmark non-UK investment life wrapper tax change lauded by AIC

The Association of Investment Companies (AIC) has welcomed landmark 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.

The new law – which came into effect on 1 January – 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, can now consider non-UK investment companies and REITs for the first time.

Ian Sayers, pictured left, 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.”

Life insurance wrapper

In the past, only 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.

Gary Robinson
Head of Video and Ezines at Open Door Media Publishing. Deputy Editor, International Investment. An experienced journalist and filmmaker with more than 20 years' financial services experience, both as journalist and originally as a fully qualified IFA, Gary works across both International Investment and InvestmentEurope titles. Previous video production credits include projects on BBC, C4 and SKY.

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