0% share classes: Should we welcome a comeback?

LEADER

The concept of ‘0%' or ‘bare' share classes may be staging a comeback, after HMRC dropped plans to apply VAT to platform charges earlier this month.

First rearing its head last year, the idea is based on a platform creating a single, discounted share class which it offers to all platforms, but with varying degrees of additional administrative expenses depending on the size of the distributor. Putting aside the fact the ‘zero’ label is a complete misnomer – the share class would still have an AMC – it was supported by some fund groups including BlackRock as an easier alternative to multiple share classes. The plan flopped at the first hurdle as tax experts pointed out HMRC was considering applying VAT to platform charges, something...