IT dividend rule 'could hit shareholders in the pocket'

Fund management groups and analysts have warned new dividend rules for investment trusts could see shareholders lose out as portfolios become less tax efficient.

Under the new rules set out in the Finance Bill at the start of this year and set to come into force in April, UK-domiciled investment trusts will be able to pay out capital gains as income. This will grant investment managers a higher degree of flexibility, but fund management heads have warned the rule change has a number of drawbacks. James de Sausmarez, head of investment trusts at Henderson Global Investors, opposes the new regulations as he said they are inefficient from a tax point of view. Sausmarez said private client shareholders will be hit hard in the pocket if capital ...