The government abolished Schedule 19 SDRT in its March Budget, but the Labour Party said this week the withdrawal was akin to “a loophole for hedge funds”.

In response, the IMA said a U-turn on the tax would drive ordinary UK citizens to invest through offshore financial centres.

“In fact, this tax was paid by UK authorised funds, not hedge funds. Its re-introduction would impose a £145m annual cost on the ordinary savers, investors and pensioners, who are the beneficiaries of its abolition,” said IMA chief executive Daniel Godfrey (pictured).

“The IMA has conducted research with KPMG, which calculated that every £1bn of funds domiciling in the UK would generate approximately £1m of new tax revenues, including from job creation around the UK.

“Given the fact that UK asset managers now manage over £700bn in offshore funds, the amounts at stake are very important.”

In March, the IMA said the scrapping of the tax was an important step in moving towards a “level playing field” for the UK and other fund domiciles.