The ETF Exchange has been granted distributing fund status by HM Revenue & Customs for the accounting period 15 July 2008 to 30 June 2009.

The status has been granted to all 21 exchange-traded funds on the ETF Exchange.

The ETF Exchange is a third generation ETF platform which is supported by Bank of America Merrill Lynch, Barclays Capital, Citi, and Rabobank International, which are participants on the platform.

Distribution fund status means that the tax on any gains by UK tax residents will be treated as a capital gain rather than income. This could make a big difference for higher rate tax payers as the current rate of capital gains tax is 18 per cent versus a 40 per cent income tax rate which will increase to 50 per cent from 6 April 2010 onwards.

Distributing fund status is also advantageous for UK authorised investment funds and investment trusts as they will be exempt from tax on any chargeable gain. In addition non UK investment funds which themselves seek distributor status (or are reporting funds) will not need to distribute/report any gain.

Mark Weeks, chief executive of the ETF Exchange, says: “This is another step forward in providing UK investors a tax efficient way to gain exposure to a unique range of real asset and tactical asset allocation ETFs."