Tuesday, 21 February 2017
Last updated 3 days ago
Mar 3 2008 | 11:34am ET
The British government could shatter the country’s image as a hedge fund-friendly locale in one fell swoop, a major industry group is warning.
The U.K. Treasury’s plan to impose a £30,000 charge on long-term resident non-domiciled workers would aversely affect some 60% of the country’s hedge funds, the Alternative Investment Management Association warns. The lobbying group, in a letter responding to the proposal, is urging the government to reconsider the move, which would risk “undoing the government’s excellent work in other areas to encourage and sustain the hedge fund industry in the U.K.”
The new tax system is set to take effect in April.
AIMA said that 77% of the hedge funds responding to a survey last week said more than half of their employees are non-domiciled, with 11% indicating that more than 75% of their workforce is non-domiciled. More than 60% said that the tax changes would affect them.
Britain, which is home to some 80% of Europe’s hedge fund industry, risks losing that predominance if the new tax plan goes into effect.
“This presents a serious threat to the U.K. financial services industry and the U.K. economy as a whole,” Andrew Baker, deputy CEO of AIMA, warned in the letter. “Unfortunately, we believe that the proposed measures will cause these key people to reassess their positions and potentially migrate to more favorable jurisdictions over the next 18 months or so.”
Already, U.S. private equity giant TPG Capital has reportedly considered shifting its European base of operations from London to Switzerland should the tax proposal be adopted.