Clause 49 - Meaning of “investment trust”

Part of Finance (No. 3) Bill – in a Public Bill Committee at 12:00 pm on 7th June 2011.

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Photo of Mark Hoban Mark Hoban The Financial Secretary to the Treasury 12:00 pm, 7th June 2011

I am grateful to the right hon. Gentleman for raising those questions. Let me first say a little about clause 49. It makes changes to introduce a new tax framework for investment trusts, including the removal of rules that have imposed unnecessary restrictions on the commercial activities of investment trusts in the UK. The changes introduce a new, modernised framework that provides increased certainty for investors and reduced costs to businesses. It is worth bearing it in mind that the rules have remained unchanged since 1965, so they are perhaps overdue for reform and modernisation given the change in the investment landscape over the past 46 years. The changes have been greeted with support from the investment trust community, which welcomes the proposals that we have set out.

In respect of the questions that the right hon. Member for Delyn has asked, the first exercise of the powers in both clauses 49 and 50 will be subject to the affirmative procedure, so there will be a debate in Committee. Subsequent uses of those powers will be dealt with through the negative procedure, under which hon. Members will be required to pray against those motions to enable a debate to take place. I assure the right hon. Gentleman that the first use of the powers will be subject to the affirmative procedure, so there will be the opportunity for proper parliamentary scrutiny as a matter of course.

The changes will be brought forward in the autumn of this year. I hope that, with the Committee’s support, clause 49 will stand part of the Bill.