Labour shadow financial secretary Chris Leslie has attacked the Government’s “crazy” decision to abolish Schedule 19 stamp duty as the wrong priority in tough economic times.
In the Budget, Chancellor George Osborne outlined plans to scrap the 0.5 per cent special stamp duty reserve tax, which applies to collective investment schemes when investors sell units that are then re-issued within a two-week period, from 1 April 2014.
The Government says the move will save the asset management industry £145m in the 2014/15 tax year, £145m in 2015/16, £150m in 2016/17 and £160m in 2017/18.
Asset managers have consistently flagged Schedule 19 as one of the main obstacles to establishing new funds in the UK and one reason the country is increasingly losing business to international rivals such as Dublin and Luxembourg.
Speaking in the House of Commons this week, Leslie said the move would only benefit wealthy asset managers and called for the Government to produce an assessment of its impact.
He said: “The Chancellor was supposedly faced with difficult choices and cuts in the Budget. That he has chosen to give a tax cut of this order at this time is a reflection of his priorities, which are beyond understanding for many opposition members.”
Labour MP Geraint Davies said: “I have been provoked to stand up and speak on this outrageous stealth tax, which is an attempt to subsidise the very richest in a clandestine way.”
Treasury financial secretary Greg Clark defended scrapping the stamp duty by claiming it would boost the UK asset management industry and that the cost of the tax eventually lands with pensioners invested in the funds.
Conservative MP Mark Field said: “Although he has characterised the beneficiaries as being very wealthy, this change will ensure that jobs are retained in this important industry, especially back-office and middle-office jobs, as it goes from strength to strength in the decades ahead.”