Fund Managers’ Tax Practices Under Scrutiny

Chancellor George Osborne delivers his Autumn Statement to parliament yesterday.UK-based fund managers have been targeted in the latest tax avoidance clampdown by Chancellor George Osborne.

The measures are designed to prevent individuals from claiming regular or “guaranteed” elements of their remuneration as capital gains, rather than income, and so paying less tax. This can include share schemes or other regular payments other than cash or performance-related bonuses.

According to the UK Treasury’s estimates, this clampdown will raise £160 million in tax in 2016-17, and £80 million in 2017-18.

Osborne made the announcement on Wednesday as part of his Autumn Statement, a “mini-Budget” designed to provide an update on the economic and fiscal position of the UK. It was also the chancellor’s final opportunity to update fiscal, economic, and tax policy before the general election in May.

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The document accompanying Osborne’s statement said legislation would be introduced from April 6, the start of the next fiscal year, “to ensure that sums which arise to investment fund managers for their services are charged to income tax”.

“It will affect sums which arise to managers who have entered into arrangements involving partnerships or other transparent vehicles, but not sums linked to performance, often described as ‘carried interest’, nor returns which are exclusively from investments by partners,” the document stated.

In the main UK Budget statement in March, Osborne unveiled a major overhaul of pension rights including scrapping the requirement for an individual to buy an annuity with a defined contribution pension pot.

The Autumn Statement can be read on HM Treasury’s website.

New York University’s (NYU) endowment will be short a CIO in the coming year with the departure of current chief Tina Surh.

The university confirmed that her resignation from the $3.5 billion fund would be effective December 31, 2014.

“Tina has dedicated herself to NYU’s success and has been integral to our efforts to build and protect the endowment,” said Martin Dorph, executive vice president of finance. “She has played a leading role in building the investment function from the ground up and driving substantial development across all aspects of the endowment’s portfolio and management.”

Surh was promoted to CIO in 2009—four years into her career at NYU—inheriting a fund that had lost 11% that fiscal year. As CIO, she also worked closely with hedge fund magnate and former chairman of the endowment’s investment committee Michael Steinhardt.

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“Together with my colleagues and the indispensable guidance of the board, we accomplished an incredible amount in creating the NYU endowment’s growth platform while at the same time ensuring it would be resilient to the stresses of the global financial market,” Surh said.

During her tenure, the endowment more than doubled in size from $1.5 billion to $3.5 billion. The university also said the fund returned 8.5% annually for the five years ending September 31, 2014, “meaningfully outperforming its long-term policy benchmark return of 7.1%.”

The endowment returned 13.7% in the fiscal year ending August 31, 2014.

Prior to NYU, Surh worked on manager research and selection with Princeton University’s endowment. She also served as a direct private equity investor with middle market buyout and growth equity investment manager DCMI and began her career as a strategy consultant at Bain & Company.

The departing CIO holds a bachelor’s degree from Tufts University and an MBA from Harvard Business School.

According to NYU Local, a news blog run by NYU students, Surh earned $690,265 in 2013.

NYU’s spokesperson confirmed that the university has begun a search for Surh’s successor.