Britain set out options on Tuesday for increasing the global attractiveness of its £9.9 trillion ($13.59 trillion) asset management sector after Brexit put European Union retail fund investors out of reach.

The finance ministry said in a public consultation paper that ideas for change include exempting authorised funds from tax and creating an unauthorised tax-exempt fund structure for investment in alternative assets.

"Either option above would be a major departure from the current approach, and the government therefore needs to build a sufficient evidence base to justify taking forward any proposals," the paper said.

Britain has no intention of changing a long-standing global practice known as delegation that allows a portfolio manager in one country to select assets such as stock and bonds for inclusion in a fund in another country, it said.

The EU has said it was reviewing delegation, with a view to potentially tightening conditions, raising alarm in the global funds industry.

Britain's funds industry is Europe's largest and second largest globally, with nearly £9.9 trillion under management.

Some in the industry believe that being outside the EU means that Britain may not be competitive for retail funds internationally, the paper said.

As a result, the government has been encouraged to focus on proposals to enhance Britain's reputation as a location for alternative investment funds, it added.

Alternative investments typically refer to hedge funds,private equity or new types of assets, such as renewable energy.

Rahul Manvatkar, investment funds partner at law firm Linklaters, said that Brexit means Britain will have to enhance its reputation as an attractive hub to set up and administer funds.

"The Treasury's call for input today will be welcomed by the UK funds industry who will be only too aware of the need for the UK to remain competitive in the post-Brexit era," Manvatkar said.

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