Budget 2014 – Stamp Duty Reserve Tax (SDRT) – OEICs and UK unit Trusts

Stamp Duty Reserve Tax (SDRT) is charged at 0.5% on the consideration paid for shares or units in a unit trust by taxable persons. Finance Act 1999 Schedule 19 introduced a charge to deal with transactions within unit trusts and Open Ended Investment Companies.

Under Schedule 19, fund managers are required to pay SDRT charges incurred on units surrendered by investors on a monthly basis.  The amount of SDRT payable by the fund manager is reduced by taking into account the number of units issued by the manager in the month and also the extent to which the Fund invests in exempt investments such as overseas equities and bonds.

The measure will abolish the SDRT charge, which fund managers are liable to pay when investors surrender their units in UK unit trust schemes or shares in UK Open Ended Investment Companies. The abolition will apply for all surrenders on or after 30 March 2014.

Fund managers will no longer have to pay SDRT on units surrender to them in respect of UK unit trusts or OEICs.   This may well make it more attractive to launch more UK based fund products.