Incentives for investment in R&D & capital

For the Financial Services sector this Budget continues in its aim to encourage investment into the UK, to simplify current regimes and associated tax law and introduce new regimes to enhance the UK’s competitiveness as a location for all financial services but in particular for asset management and investment funds. 

Asset Management

The UK government is introducing a new elective tax regime for qualifying asset holding companies (QAHCs). This measure is part of the government’s wider review of the UK funds regime and could be a game changing regime for the location of funds and their asset holding companies. The broad aim is to ensure that UK investors are taxed as if they invested in the underlying assets directly and that asset holding companies pay no more tax than is proportionate to the activities they perform. These new rules, with benefits similar to those already available in Luxembourg and Ireland, should go some way to enhance the UK’s attractiveness as a centre for asset management and investment funds. 

Other matters

The government also announced a number of other measures, again with the overall aim of increasing the attractiveness of the UK as a leading global financial services hub, to include: 

  • A reduction in the rate of the surcharge on banking companies from 8% to 3% and an increase in the surcharge allowance from £25 million to £100 million. This measure will have effect from 1 April 2023. 
  •  The government is keen to ensure that the UK’s Stamp Duty and Stamp Duty Reserve Tax (SDRT) rules contribute to maintaining the UK’s position as a leading financial services centre, and thus will make technical changes to these rules to allow UK securitisation and insurance linked securities (ILS) arrangements to operate more effectively, while also increasing the flexibility of the government in responding to the evolving nature of the securitisation and ILS markets. 
  • As the number of UK real estate investment trusts (REITs) and the number of large institutional investors therein continues to grow, the government will make changes to the rules applying to REITs to remove certain constraints and administrative burdens which are no longer necessary, again making the UK more attractive as a location for the growing REITs sector. 

As a collective, the measures announced in today’s budget and recent budgets indicate that the UK government want to protect, develop and grow the financial services sector and the asset management industry, making it easier for companies to operate and thrive in the UK.

Get in touch

If you have any queries on the topics covered above, please contact Ian Lockington  partner, KPMG in Belfast.