SAIM6300 - Collective investment schemes: offshore funds: overview
Offshore funds
ICTA88/S756A to S764, ICTA88/SCH27 and SCH28 set out special
rules for the taxation of gains arising to UK investors on
disposals of their interests in certain offshore funds.
The legislation aims to distinguish offshore funds which
distribute the whole, or substantially the whole, of their income
to investors (distributing funds) from those which roll up most of
their income so as to increase the capital value of each investor's
holding (non-qualifying funds).
In general:
- unless equalisation arrangements are operated ( SAIM6360) a gain arising on the disposal of a holding in a distributing fund is chargeable under normal taxation of chargeable gains rules;
- a gain arising on a disposal of a holding in a non-qualifying fund attracts a charge to Income Tax under ITTOIA05/PT5/CH8 or to Corporation Tax under Schedule D Case VI. These gains are referred to as ‘offshore income gains' ( SAIM6350). In applying the charge, no credit is given for any increase in the underlying value of the holding.
The provisions do not apply to gains accruing up to 1 January 1984. Where a disposal of a holding in a non-qualifying fund takes place and that holding was acquired before 1 January 1984 please seek the advice of CT & VAT (Finance and Insurance Team).
