AJ Bell  

AJ Bell scraps VAT and lines up responsible MPS

AJ Bell scraps VAT and lines up responsible MPS
 Credit: Chris Ratcliffe/Bloomberg

AJ Bell has removed value added tax from its managed portfolio service and is to introduce a responsible version to its range.

The platform announced today (January 11) it has scrapped the extra charge, in a move it said would “cement its position as one of the cheapest in the market”.

Kevin Doran, chief investment officer at AJ Bell, said: “These changes take all our passive growth MPS options below the 0.3 per cent mark.

“This means with our platform charge of 0.2 per cent for our Sipp, Isa or general investment account, advisers now have access to a suite of risk-managed portfolios, on platform, at less than 0.5 per cent per annum.  

“That’s exceptional value in a highly competitive market, consistent with our commitment on costs.”

AJ Bell's MPS range:
 Balanced GrowthIncome
 Old OCFNew OCFOld OCFNew OCF
Passive MPS0.31%0.28%0.37%0.34%
Active MPS0.75%0.72%0.66%0.63%
Pactive MPS0.64%0.61%N/AN/A

The annual charge for the AJ Bell Retirement Investment Account remains 0.25 per cent on assets below £500,000 and 0.2 per cent on assets above £500,000.

AJ Bell said it was also preparing to launch a Responsible MPS over the coming months, which will give advisers a low-cost managed portfolio for clients who want diversified exposure to companies with strong environmental, social and governance (ESG) credentials.

ESG investing has boomed in popularity in recent years as fears over climate change have led investors to consider the impact of their money and as a growing number of millennials have begun investing.

2020 saw a record year for ESG inflows, and fund houses — including AJ Bell, which introduced a sustainable fund in November — have been quick to capitalise on the growing interest with numerous portfolio launches.

Mr Doran said: “We are always looking at how we can evolve the MPS in line with the needs of advisers and are working towards launching a responsible investment option within the MPS over the coming months.”

The VAT scrapping trend

The question of whether VAT should be levied on MPS surfaced last year when the taxman ruled Tatton’s MPS was exempt from the tax.

Other companies — such as Brewin Dolphin, Quilter, Investec and Brooks Macdonald — have since followed suit.

Most DFMs are seeking an individual ruling from HMRC on whether VAT is payable on their MPS, though the taxman has now told multiple firms to ‘self assess’ the situation.

MPS fees have seen downward pressure in recent years, with firms charging as little as 0.15 per cent, and as DFMs across the market looking to knock VAT off the price the average price is likely to slip further.

imogen.tew@ft.com

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