Central to that plan – in addition to a mansion tax on homes worth more than £2m and a levy on the profits made by tobacco companies – is a move to raise an estimated £600m from ending a relief which allows hedge funds to avoid paying tax on shares by getting investment banks to buy them on their behalf.
But intermediary tax relief, which he appears to be targeting, benefits not just hedge funds but pension funds and endowments as well as large companies.
Can someone explain this to me? A quick look around tells me that this relief applies to intermediaries. I.e, people buying shares on behalf of someone else.
But what’s the detail of it? My assumption is, and this is what might be wrong, that if I buy some shares through my bank (say) then the transaction as a whole pays stamp duty just the once. The bank doesn’t pay on their purchase, then I pay on my purchase from the bank. The bank being the intermediary here they get relief, but I as the end buyer don’t.
Have I got that right?