§ Mr. FrenchTo ask the Chancellor of the Exchequer what representations he has received from the unit trust industry about the proposals in clause 105 of the Finance Bill. [15201]
§ Mrs. Angela KnightClause 105 of the Finance Bill contains proposals to replace the present stamp duty regime for repurchases of units by unit trust managers by a new stamp duty reserve tax regime. At present, a repurchase of units by the managers is liable to stamp duty at 0.5 per cent., but the duty may be repaid if the unit are cancelled within two months and the underlying investments are sold. The unit trust industry has criticised this regime because of the record-keeping required to check whether units are cancelled within two months, and because it is not certain, at the time of a repurchase, whether or not duty will ultimately be repayable.
Clause 105 seeks to deal with these problems by introducing a new stamp duty reserve tax regime which would remove the right to a repayment when units are cancelled, but would balance that by reducing the rate of tax on a repurchase to 0.2 per cent. This was intended to meet the criticisms which have been made of the present rules, and to raise broadly the same revenue as now but more simply and certainly. The industry has, however, now made representations that this particular approach would cause problems for some investors, and that it would prefer the present regime to continue for the time being while it considers possible alternatives. We are prepared to accommodate their request, and we will 679W expect the industry to come forward with proposals which are capable of dealing with the criticisms made of the present regime while continuing to raise the same revenue as now.
We therefore intend to withdraw the proposals in clause 105, and leave the present stamp duty regime to continue for the time being. The regulations we will be making for the stamp duty and stamp duty reserve tax treatment of open-ended investment companies will adopt a similar approach.