Last month, new rules set out in the Finance Bill gave UK-domiciled investment trusts the freedom to distribute capital profits as income for the first time in the sector's 100-year plus history.
In order to introduce the new rules, shareholder approval is required to amend investment companies’ Articles of Association, which currently state dividends can only be paid from revenue profits. Lifting the restriction has put the sector on a level playing field with Guernsey-domiciled offshore funds, which have no limits on paying out realised capital gains. The rule change has a number of advantages, which various investment trust commentators were quick to champion. The most notable is the greater flexibility it brings, including enhancing an investment trust’s capability to p...
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