Hargreaves Lansdown has confirmed a number of its new discounted fund deals will be subject to HMRC's rebate tax, with only 9 of the 27 funds on its Wealth 150 Plus list available via preferentially priced share classes.
The group unveiled its 27-strong core list of 'Wealth 150+' funds over the weekend, with funds from groups including M&G, Artemis and Newton all making the list.
The deals the D2C giant secured mean funds on the list have an average AMC of 0.54%.
Hargreaves has been pushing fund groups to launch new super clean discounted share classes for its core list, but Saturday's announcement showed only 9 of its 27 Wealth 150 Plus deals are done via such share classes.
The remaining 18 are done via existing share classes, with unit rebates used to give Hargreaves specific terms.
This means investors buying these funds outside of a tax wrapper such as a SIPP or ISA will face an additional tax of at least 20% on any discounts, with some investors potentially paying higher tax rates.
For example, on the GLG Japan Core Alpha fund, Hargreaves has secured a discount of 0.1 percentage points, with the fund's AMC standing at 0.65% compared with a conventional 0.75%.
However, the rebate tax will swallow a portion of that, meaning an actual discount of 0.08% for basic rate tax payers.
Hargreaves has already launched a challenge to HMRC's April 2013 introduction of the rebate tax, with the group currently holding any tax paid by clients in respect of the tax in a separate account.
It intends to hold this money until the tax dispute is resolved with HMRC, and then either return it to clients or pay it to the Revenue if needed.
Danny Cox, head of financial planning at Hargreaves, (pictured) said: "We are currently waiting for a response from HMRC but don't have any timescale. In our view rebates and loyalty bonuses should not be taxed."
Fund groups holding the line
On the core Wealth 150+ offering itself, Mark Dampier, head of research at Hargreaves, said the group would look to expand the list over time.
"This is our opening salvo. It is not going to stand still, so the core will gradually expand," he said.
While a number of major fund groups are not on the list for now - including Jupiter and Henderson - Dampier said groups would not be able to hold the line on prices indefinitely.
"The reality is, in 99% of cases there is an attractive alternative fund investors can use, so we do not think groups will be able to hold the line forever."
The Wealth 150+ funds subject to rebate tax (in bold):
|Fund||Standard AMC||Wealth 150+ AMC|
Aberdeen Latin American Equity
|Artemis Strategic Assets||0.75%||0.66%|
|Artemis Strategic Bond||0.5%||0.41%|
|AXA Framlington Managed Balanced||0.625%||0.5%|
|CF Lindsell Train UK Equity||0.65%||0.45%|
|Fidelity MoneyBuilder Income||0.4%||0.3%|
|First State Asia Pacific Leaders||0.85%||0.8%|
|GLG Japan CoreAlpha||0.75%||0.65%|
|Invesco Perpetual Tactical Bond||0.625%||0.45%|
|Lindsell Train Global Equity||0.65%||0.45%|
|Marlborough Multi Cap Income||0.75%||0.6%|
|Marlborough UK Micro-Cap Growth||0.75%||0.7%|
|Morgan Stanley Sterling Corporate Bond||0.4%||0.15%|
|Newton Asian Income||0.75%||0.62%|
|Newton Emerging Income||0.75%||0.55%|
|Newton Global Higher Income||0.75%||0.62%|
|Newton Real Return||0.75%||0.62%|
|Old Mutual UK Alpha||0.75%||0.65%|
|Royal London Sterling Extra Bond Yield||0.75%||0.32%|
|Schroder Managed Balanced||0.5%||0.3%|
|SLI UK Smaller Companies||0.85%||0.65%|
|Threadneedle European Select||0.75%||0.65%|
|Threadneedle UK Equity Income||0.75%||0.65%|
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