Trusts get DTI reprieve

Investment Trusts whose dividend payments were threatened by new accounting
rules have been handed a lifeline by the government.

The DTI yesterday clarified ‘distribution provisions’ for trusts in order to
prevent accounting changes disrupting dividend payments.

Accounting tests apply to the payment of dividends by investment trusts, and
new standards, IAS32 and IAS39, which would have changed accounting for certain
classes of share, would have meant trusts’ assets fell to below 1.5 times their

The new regulations are set to clarify the tests, the Association of
Investment Trust Companies (AITC) said. Daniel Godfrey, director general of the
AITC, said: ‘We are very pleased that the DTI acted so swiftly and decisively to
resolve this issue.’

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Fiona Westwood of Smith and Williamson.