Standard Life will pay the rebate tax for mutual fund customers after HM Revenue and Customs decided rebates should be subject to tax.
The group has agreed with HMRC to pay the mutual fund rebate income tax liability until the end of December 2013 on behalf of all Standard Life Wrap and FundZone customers.
The one-off settlement will be paid directly to HMRC to cover clients’ basic, higher and additional rate tax liability to the end of this year.
As well as covering customers’ tax liability for 2013, customers will not have to include this income in their tax return and avoids the supporting paperwork and client communication advisers would otherwise have needed to produce.
The settlement does not create any further tax liability for clients and advisers do not have to inform Standard Life of individual clients’ tax positions. It will be treated as a gift for tax purposes, meaning there will be no further tax implications as a result of the settlement.
David Tiller, head of platform propositions at Standard Life, said: “We disagree with HMRC’s analysis of the relevant legislation and believe customers and advisers should have been given time to make alternative arrangements.
“We have decided that, if HMRC’s view stands, we will pay this year’s mutual fund rebate income tax liability on behalf of all advisers’ clients on our platforms. This allows until the end of the year to move clients to clean and super clean share classes, eliminating any potential rebate tax liability in the future.
“Making life easier for advisers and their clients is the key driver behind our ‘leading platform programme’. Settling the tax liability for advisers’ clients, as well as the paperwork and difficult conversations it would have created for advisers is the right thing to do.”
