AIMA: Hedge Funds Will Flee Under New Tax Regime

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.


In Depth

Q&A: High Conviction, Low Correlation

Oct 30 2014 | 7:35am ET

Acadian Asset Management's numbers are big: over $70 billion in assets under management...

Lifestyle

Ex-Hedgie Steyer Gives $56M To Climate Action Super PAC

Oct 28 2014 | 9:23am ET

Retired Farallon Capital founder Tom Steyer has poured almost $56 million into his...

Guest Contributor

Hedge Funds Weather A Data Management Perfect Storm

Oct 22 2014 | 12:28pm ET

From a regulatory standpoint, nearly every development since the crisis has placed...

 

Videos

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

October 2014 Cover

The yield curve and stock market response

Traders form habits quickly. Understanding these and their effects can better equip us to decipher actual market moves.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.