The Association of Investment Companies (AIC) has claimed that changing the current tax system for investment trusts will have "significant" advantages for consumers.
According to the organisation, the current regime places limits on investment trusts investing in assets that produce income, such as property.
Instead, the AIC proposed a "streaming" system to enable trusts to receive this kind of income tax-free, before breaking down dividends into "separate components" that can then be taxed "in the hands of investors".
Daniel Godfrey, director general of the association, said: "Modernising the rules as we have proposed will help meet consumer needs at the same time as supporting the government's agenda to encourage competition and long-term saving."
The AIC is the trade organisation for the closed-end investment company industry, representing a variety of firms across a number of sectors.
In response to increasing diversity within the industry, the body changed its name from the Association of Investment Trust Companies in 2006.
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