LONDON -(Dow Jones)- The U.K. Treasury is planning changes to the tax
rules for asset management funds, something that will make the sector
more competitive, the U.K. government said Monday.

A consultation document said the government is considering a direct
tax exemption for authorized investment funds.

"The framework is based around moving the taxation from the AIF (the
asset management fund) to the investor," the document said. That would
mean investors facing essentially the same tax treatment as they would
if they owned the underlying assets directly.

For those funds that opt into the new regime, they will remain exempt
from capital gains tax, while "defined streams of income" generated by
the fund would be tax-free.

Announcing the proposals, Kitty Ussher, Economic Secretary to the
Treasury, said: "we are determined to maintain momentum on
improvements to the taxation of asset management to ensure the
industry remains highly competitive in the face of new global challenges."

The government also proposed changes to the tax rules for Investment
Trust Companies to deliver "tax efficient investment into interest
bearing assets."

These U.K.-based firms manage GBP3.8 trillion in assets and employ
more than 25,000 people, the government said.

The industry has until October 22 to respond to the proposals.

HM Treasury Web site: www.hm-treasury.gov.uk/

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