§ Sir Michael McNair-WilsonTo ask the Chancellor of the Exchequer what representations he has received from investment trusts and unit trusts about personal equity plans; and if he will make a statement.
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§ Mr. Norman LamontI have received representations from a number of investment trusts and unit trusts, and from the Association of Investment Trust Companies. The main concern is that investment trusts in particular will find it difficult to meet the requirement from 6 April 1990 that, to qualify for investment through a personal equity plan, 75 per cent. of their own investment must be in United Kingdom ordinary shares. The Government have therefore decided to introduce four relaxations:
- (i) To help investment and unit trust PEP schemes in existence before the Budget, an investor will have the option of investing up to £750 a year in an investment or unit trust which does not satisfy the 75 per cent United Kingdom requirement. This will be an alternative to investing up to £2,400 in trusts which do satisfy the requirement.
- (ii) Third market and unquoted shares of United Kingdom companies in a unit or investment trusts' portfolio will count towards the 75 per cent. test.
- (iii) Unit trust "funds of funds" will be qualifying investments, provided that the unit trusts in which the fund of funds invests are authorised securities schemes. From 6 April 1990, funds of funds must also comply with the requirement to invest at least 75 per cent. in United Kingdom equities.
- (iv) Investment trusts' "capital" and "income" shares will also count towards the 75 per cent. test, as will other ordinary shares issued by them. This will enable investment trusts (and unit trusts) to invest in United Kingdom investment trusts which issue capital or income shares rather than ordinary shares. But, as with unit trust "funds of funds", the underlying investments must, overall, be 75 per cent. in United Kingdom companies.
The Personal Equity Plan Regulations 1989 will be amended in due course to reflect these changes.