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QUESTIONS AND ANSWERS |
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| Q. What parts of Tax Incentivised Savings are covered by this project? A. The project covers transfers of portfolios of one or more investment fund holdings between relevant parties (see "Scope" in this website). The assets can be outside a wrapper or inside, and can be on a platform or supermarket, or not. The main tax-incentivised wrappers are Individual Savings Accounts (ISAs) and Self Invested Pensions (SIPPs). Q. What is the problem we are trying to solve? A. Investors can hold unit trust and similar investments in their ISAs and SIPPs and on "platforms" or "supermarkets". When investors want to move their investments from one provider to another it can take a long time because it is a manual and complex process. The moving process is so complex and time-consuming that many providers will not transfer the investments but insisted that investors sell their investments and transfer cash to the new providers. However the industry recognised that this was disadvantageous to the investing public, and decided to do something about it. The first phase was to encourage more providers to allow the transfer of investments from one provider to another, and the current phase is to automate the process. Q. Does this project cover all tax incentivised savings and all types of investments? A. The tax-efficient wrappers that the project is focussed on are ISAs and SIPPs. The wrappers that are covered by this automation project are ISAs but not yet SIPPs. The investments that will be covered are UK-registered unit trusts, UK-registered OEICs, and cash. Other types of tax-incentivised wrappers and investments may be included in a later phase, but this will only be considered once the current phase has been completed successfully. Q. What is the regulatory position? A. The Financial Services Authority (FSA) stated in its Discussion paper "DP 10/2: Platforms: delivering the RDR and other issues for discussion" in paragraph 4.11 that "Due to the potential for customer detriment, we are minded to make it compulsory for platforms to allow assets to be re-registered off their platform no later than the implementation of the RDR on 31 December 2012. This gives the industry time to agree and put in place an automated solution, but we will expect re-registration to be available whether an automated solution is in place or not." Therefore this voluntary project shows the industry is aware of investor interests and ahead of the possible change in regulatory requirements. Q. What is the tax position? A. This project is not affected by any changes in taxation laws and will not need any change in taxation arrangements. The aim of the project is merely to automate arrangements within existing taxation rules. |
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