Investing
Hargreaves Lansdown launches legal challenge to ‘discount tax’ on fund rebates
Hargreaves Lansdown has moved to officially challenge HMRC’s decision to impose a so-called ‘discount tax’ on rebates paid to fund supermarket customers.
In March the revenue decided to introduce a tax on ‘loyalty bonuses’ made to investors by fund managers, fund platforms, or advisers, from 6 April 2013, on the grounds they are annual payments and therefore subject to income tax.
In a statement, Hargreaves Lansdown said it had consulted with legal counsel and was now pursuing an official challenge to the tax.
Ian Gorham (pictured), chief executive of Hargreaves Lansdown, said the introduction of what the group is calling a ‘discount tax’ is “extremely disappointing news and an attack on the small investor”.
“The ‘discount tax’ is anti-competitive. Loyalty bonuses have been hugely popular with investors and helped them save money on investing in their favourite funds. We have saved investors over £1bn in the form of discounts and loyalty bonuses, helping clients benefit from lower costs,” he said.
He said loyalty bonuses, which can be as much as 0.5% depending on the funds chosen, go straight to the investor without any need for them to be declared on a tax return, or shared with HMRC.
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Hargreaves – which has been considering legal action since the rebate tax was announced – said its legal challenge is expected to take many months.
Loyalty bonuses do not affect ISA or SIPP contribution allowances.