Tax in unit pricing

There may be as many different methods for applying tax within the unit prices of life funds as there are companies operating such funds, as there are no prescriptive rules to follow.  So how do you know whether your methodology is fair to investors and the company?  And what does “fair” mean in this context?

Particular difficulties can arise in relation to the treatment of investment losses, given that the investors in the fund when the losses arise may well be different from the investors in the fund at a later date when those losses can be offset against investment gains.  Some insurers choose to place a value on such carried forward losses within their unit prices, but it can be difficult to determine an appropriate tax rate to use.

We can review your current approach, identify any aspects which are out of line with market practice and suggest possible alternatives.  We will draw upon our practical experience of calculating tax in life funds, the ABI’s Guide to Good Practice and outcomes from the FCA’s 2013 Thematic Review.