Finance Bill - Interest streaming in the offing

The Treasury is to consider ‘streaming’ interest from bonds held by balanced unit trusts to allow pensions funds to reclaim tax.

Paymaster General Geoffrey Robinson told MPs: ‘We have received representations and we shall study the matter.’

He gave the impression that streaming was ‘a fairly widespread proposition emerging from the industry’ and promised to do his best to meet concerns. Robinson said the Treasury had nothing against balanced funds – although he claimed he might argue about their advantages.

He was replying to Tory MP Tim Laughton, who claimed in the finance bill committee that some pension funds could not restructure investments into funds where tax was reclaimable on bond interest while others could – at a cost.

He said streaming was barred because some unit holders might have been able to reclaim more than had been paid out in corporation tax, but that was coming to an end anyway.