Skandia has decided to add clean share classes to its platform, for example 0.75% for a standard equity fund, and pay a unit rebate where possible. This will enable it to maintain the current net fund prices it offers to customers and minimise the tax liability for them on the rebate.
In addition Skandia will continue conversations with its fund group partners about launching preferential share classes (sometimes referred to as super clean) for its platform to ensure that advisers and their clients using the Skandia platform always receive the best net fund costs available in the market.
The addition of clean share classes will complement Skandia’s existing fund range and will be available across all products on its unbundled platform, where rebates are paid in full to customers in the form of units. This development will enable advisers and their clients to select the share class most appropriate to their individual circumstances, including their tax status.
Following discussions with a significant number of fund groups about the impact of HMRC’s decision to tax rebates Skandia has decided to take this action in order to provide a swift and positive solution for advisers and clients. It will continue to work with its fund group partners to ensure that its customers always receive the best terms currently available. This could be a combination of existing clean share classes with rebates or new preferentially priced versions that offer a lower annual management charge. Moving to clean share classes that already exist in the market and paying a rebate is expected to be the more immediate solution but does not preclude moving to preferentially priced share classes when available.
TISA, supported by the UK Platform Group, is petitioning HMRC for a delay to the proposed rebate tax however Skandia can confirm that the new unbundled charging structure launched for its platform in December was designed to accommodate tax on rebates.
The focused fund range that Skandia is currently developing with its ‘Select’ fund group partners is not impacted by HMRC’s decision to tax rebates because they will offer clean share classes with no rebate.
Peter Mann, UK managing director at Skandia, comments:
“We will continue to seek the best terms in the market to maintain our competitive net fund prices. Whilst new share classes with lower AMCs specific to our platform are an option, it has become evident that the quickest way to negate the effect of tax on rebates for our customers is to move to clean share classes that are already available and to continue to pay a unit rebate to customers albeit at a lower level to maintain the beneficial terms we offer to customers.”
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