Charles Stanley  

Charles Stanley scraps VAT & adds ESG to managed portfolios

Charles Stanley scraps VAT & adds ESG to managed portfolios
Credit: Chris Ratcliffe/Bloomberg

Charles Stanley has ditched value added tax from its managed portfolio service, joining the growing list of providers who have now scrapped the bill for advisers.

After working with its platform partners and following external guidance, the wealth manager will remove VAT from its dynamic passive, blended and multi-manager models from March 1, bringing total charges down to a minimum of 30 bps.

Charles Stanley has also partnered with MSCI to provide ESG ratings for its full range of model portfolios, a move it says will help advisers meet the growing demand from their clients for socially responsible investing options.

Sean Osborne, head of national accounts at Charles Stanley, said: “The market demand for MPS has never been stronger and we are delighted that the removal of VAT now sees fees on our MPS being charged from as low as 20bps and our total charges figure from as little as 30bps.”

Osborne said the move away from VAT combined with its new ESG ratings further underpinned its commitment to advisers who were seeking “greater value for money while responding to changing client needs”.

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 have been quick to capitalise on the growing interest with numerous portfolio launches.

The VAT scrapping trend

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

Other companies — such as Brewin Dolphin, AJ Bell, Quilter, Investec, 7IM, Liontrust 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 look to knock VAT off the price the average price is likely to slip further.

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