HMRC to rethink stance on ISA rebates after RDR

20 October 2011 | By Natalie Holt

Last week, HMRC published its latest ISA bulletin, which sets out the treatment of adviser commission rebated back to ISA customers post-RDR.

It says if a rebate is paid in additional units invested in the ISA, this will not count as a new subscription and therefore will not count towards annual ISA subscription limits.

Where commission is rebated back to the client’s non-ISA cash account and then invested into the ISA, this will count as a new subscription.

But the bulletin also says: “Where an adviser chooses to give up trail commission he has earned for pre-RDR advice so that he can have a single remuneration agreement with the customer, the payment is from the adviser to the customer, so this would count as a new ISA subscription and would count towards the annual ISA subscription limits.”

When asked by Money Marketing, Fundweb’s sister publication, to clarify the statement, HMRC could not provide an explanation of how giving up trail commission would result in money being rebated to the client.

Money Marketing understands HMRC is now revising the text. HMRC declined to comment.

To receive more relevant articles like this one, why not sign up to our briefings and breaking alerts by clicking here and Follow @fundweb