Join our community of smart investors

The tricky question of tax fairness

Given the backdrop of unsettling news on rocketing energy prices, teetering property giants and tapering, perhaps investors were feeling unusually sensitive to the healing and uplifting power of music when they drove the value of Universal Music, the world’s largest record label, to a 34 per cent premium on its market debut this week. Of course, it’s likely they also agreed with the JP Morgan Cazenove analyst who described Universal Music as a unique “must-own asset”.

But however soothing music can be, it will take more than an upbeat tune to quell the annoyance felt by some Scottish Mortgage Trust (SMT) shareholders over claims that the investment trust has “cashed in on Covid” and should be forced to pay a windfall tax on its “excess pandemic profits”.

That’s the argument put forward in a paper by Tax Justice UK, an organisation that campaigns for fairer tax. It has named six companies that it says have cashed in during Covid, and top of the list is the hugely popular and unique-in-its-own-way investment trust. The campaign group argues that SMT has made pandemic profits of more than £8bn – a pandemic-powered increase of 801 per cent. The other guilty parties are Asos (ASC), Tritax Big Box (BBOX), Serco (SRP), AstraZeneca (AZN) and Rio Tinto (RIO) and Tax Justice highlights two other trusts that have made oversized profits during the  pandemic: RIT Capital Partners (with an "excess" of £718m) and Edinburgh WorldWide (EWI) (excess of £332m). 

To continue reading...
Join our Community of Smart Investors
  • Independent full-length company analysis
  • Actionable investment ideas and recommendations
  • Expert investment tools and data
  • Stock screens from Algy Hall
Have an account? Sign in