Tax reclaim restrictions on UUTs to potentially hit pension funds

Government restrictions on reclaiming tax on overseas equity dividends via unauthorized unit trusts will potentially harm many UK pension funds, Deloitte warns.

Deloitte funds advisory business partner Ali Kazimi says the majority of the country’s pension schemes use intermediate pooling structures, such as UUTs, to invest in European equities. He says: “In the past, UK pension schemes used to be able to claim 20% back on any distribution from overseas dividends made by a UUT. However, the Government has clamped down on this.” HM Revenue & Customs released new anti-avoidance measures – which came into effect on October 21 – restricting the ability to reclaim on the distribution tax on non-UK income within a UUT. Kazimi says this undermines...