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AIC Ian Sayers

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HgCapital first investment trust to use new tax framework

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The Association of Investment Companies has welcomed the announcement that the first investment trust to use the new tax framework to stream income has reported its results. 

HM Revenue & Customs introduced the new tax framework, which allows investment trust companies to invest tax-efficiently in bonds and other interest producing assets, on 1 September 2009.
 
HgCapital Trust is the first investment trust to use the new tax framework and is to stream income from interest bearing investments. This has led to an increase in net asset value of 7.9p per share at 31 December 2009, the payment of a higher dividend and a saving of just under GBP2m in corporation tax.
 
Roger Mountford, chairman of HG Capital Trust, says: “Taking advantage of HMRC’s new tax framework has clearly been beneficial for our shareholders. Streaming income from interest-bearing investments into dividends has resulted in an enhancement to the NAV and the payment of a higher dividend. There has also been a considerable saving for the company in corporation tax.”
 
Ian Sayers (pictured), director general of the AIC, adds: “We are delighted to see the first investment company take advantage of this new tax framework which opens up new possibilities for the investment company industry. Investment trusts are now able to invest tax-efficiently in different investments allowing the industry to compete more effectively with alternative structures. Securing this new tax framework was a long-standing ambition of the AIC so it’s very encouraging to see it used to benefit shareholders.”

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