Smith & Williamson has changed the domicile of its cash unit trust from Britain to Dublin to avoid the increaseds tax rates for UK residents receiving dividend income from a Dublin cash fund.
Angus Duncan, a Smith & Williamson director, told Fund Strategy the firm had moved the fund because changes in the Budget, to be implemented from April 6, made Dublin preferable because it offered lower tax rates of up to 25%.
Duncan said that, in a British-based fund dividends were still taxed as interest income. Higher-rate payers in British funds paid 40% and lower-rate payers were taxed at 20%.
However, other fund management groups have not followed suit. John Davison, Investment Management Association head of tax, said the disparity between taxation of onshore and offshore bond funds already existed, although this had been made more acute by the recent Budget change.
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