ARTICLE · 20 APRIL 2012

Reporting Funds Regime - Increasing The Return On Offshore Investments

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The reporting fund regime allows UK investors to obtain capital gains tax treatment when disposing of investments in offshore funds.

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The reporting fund regime allows UK investors to obtain capital gains tax treatment when disposing of investments in offshore funds.

For top rate income tax payers, this can lead to a reduction in tax rates on disposals from 50% to 28%. This preferential tax treatment may improve the marketability of offshore investments to UK investors.

UK offshore fund rules

UK offshore fund rules are designed to prevent UK investors avoiding income tax by accumulating income tax-free offshore. Without these rules, investors would pay tax at the more favourable CGT rates when the income is realised on disposal of their investment.

When do they apply?

The rules will typically apply to non-UK open-ended arrangements or collective investment vehicles that allow investors to redeem their interest by reference to NAV.

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