CG41580 - Open-ended investment companies (OEICs): umbrella OEICs

An umbrella OEIC is an OEIC which is split into a number of separately pooled funds of assets, known as the sub-funds (or parts) of the umbrella company. This definition is at ICTA88/S468A (4) and is adopted for the purposes of the OEICs tax regime by SI2006/964 regulation 7. Regulation 106 imports the same definition into TCGA 1992 by inserting a new section 99AA into that Act.

An umbrella OEIC is not treated as a company for tax purposes. It is entirely transparent. Each separate sub-fund of the umbrella company is instead regarded as an OEIC in its own right, with the assets which relate to that pool of investments constituting the deemed OEIC's assets (except where the context requires otherwise).

A holder of shares in the umbrella company is deemed to be the owner of shares in the deemed OEIC which is the sub-fund in which the holder has rights for the time being. Those rights can be exchanged for rights in another sub-fund of the umbrella company, see CG57760.

Such an exchange will represent a disposal and a separate acquisition for TCGA purposes and so may give rise to a chargeable gain or loss.

This approach to umbrella companies and their parts did not change when SI2006/964 came into force.