Quadrature Capital: Generous Support and Tax Optimization

The directors of the hedge fund Quadrature Capital, one of the largest supporters of the Labour Party, have recently taken loans amounting to 160 million pounds from their firm. This move could result in a lower tax burden than would be the case with the distribution of dividends. The UK-based investment company, which manages a fund in the Cayman Islands, made a donation of 4 million pounds to Labour in May, the largest single donation to the party before the elections. The hedge fund, founded in 2010 by billionaires Greg Skinner and Suneil Setiya, supports the party's climate policy and has paid more than 2 billion pounds in taxes in the UK since its inception. However, experts point out that the amount of the loans taken out is unusual. The borrowing could lead to lower tax obligations for the two directors compared to receiving dividends. For the year ending January 2024, the directors' loans amounted to 56.7 million pounds, with interest of 3.26 million pounds. The outstanding loans now total more than 160 million pounds. Ray McCann, a former senior tax inspector at the UK's HMRC, notes that borrowing large amounts often attracts the attention of tax authorities. While the top tax rate for dividends is 39.35 percent, loans not repaid within nine months after the end of the financial year incur a tax burden of 33.75 percent. An insider close to Quadrature dismissed any suggestions of tax avoidance and emphasized that directors taking loans is part of standard tax planning and is fully declared, in compliance with HMRC rules. The company has recently restructured to open offices in Singapore and New York, focusing on electronic trading with a "market-neutral trading strategy." Quadrature has also invested more than one billion dollars in philanthropic projects and increased donations in 2023 to 247 million pounds.