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Understanding Tax Matters in Retail Distribution Review: Implications for Clients and Adviser Fees

Join Paul Kennedy, Head of Tax Planning, as he explores the critical tax considerations stemming from the Retail Distribution Review (RDR) relevant to your clients' investments and adviser fees. This presentation will cover VAT implications, HMRC guidance updates, and the distinctions between intermediation and management in discretionary services. Gain insights into the various structures of fees, including rebates and insurance bonds, while understanding the interaction between fees and taxation on investment products. This session is designed for investment professionals only.

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Understanding Tax Matters in Retail Distribution Review: Implications for Clients and Adviser Fees

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Presentation Transcript

  1. A talk on matters of tax concerning the Retail Distribution Review appertaining to your clients’ investments and your adviser fees • Paul Kennedy • Head of Tax Planning

  2. RDR: VAT VAT • EU Directive / UK law • Draft HMRC guidance (November 2011) • Final HMRC guidance (March 2012) • Discretionary Investment Management (ECJ - July 2012) Summary • Transactional: retail investment products • Six-step process • Ongoing services • Ancillary services Issues and implications • Evidence requirement • Records of VAT-able business where not registered • Intermediation vs. management • Discretionary services HMRC guidance

  3. Taxation of investment products post-RDR The questions Pensions • Fees and schemes • VAT • Revised HMRC guidance Collectives • Platform fees • Adviser fees • Rebates (provider) • Rebates (adviser) • Share class switches ISA • Fees • Rebates (provider) • Rebates (adviser) Insurance bonds • Adviser fees and chargeable events • Net vs. gross • Top-ups and change of contract terms

  4. A developing hierarchy of fee extraction Cash payment vs. provider facilitation Tax relief on adviser fee Using an unused tax allowance to pay fee Middle ground Depleting benefit of tax-break to pay fee Tax charge caused by fee Interaction of fees with taxation of investment Fee extraction Monitoring the tax position (CGT reports)

  5. This presentation is for Investment Professionals only, and should not be relied upon by private investors. Issued by Financial Administration Services Limited, authorised and regulated in the UK by the Financial Services Authority. FundsNetwork™ and its logo are trademarks of FIL Limited. This document may not be reproduced or circulated without prior permission. No statements or representations made in this document are legally binding on FundsNetwork or the recipient. FNWSSO190/na

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