|
|
|
A consultation paper was issued today on offshore funds. The consultation period ends on 9 January 2008. The
Chancellor's objectives are to simplify the tax regime for offshore funds,
provide certainty to UK investors and strengthen anti-avoidance.
The main features are to propose a new method of defining offshore funds for
UK tax. The result should be of little material impact for most investors in
retail type funds.
The status of funds in umbrella structures, including protected cell
companies, will be tested at the fund or cell level, in line with current
rules in order to ascertain whether they are "reporting funds" - broadly
equivalent to "distributor" funds.
There is a loophole intended to be closed on the taxation of offshore income
gains. This is the basis of taxation for non-distributor funds at present,
and will apply to non-reporting funds in future. At the moment, income gains
arise on 'rolled up' gains. An investor can be non UK-resident for as little
as one complete tax year to avoid tax on these gains. In future it is
intended that investors will need to be non-resident for five complete tax
years, bringing the tax position into line with the taxation of capital
gains.
|
|
