Authorised investment funds changes
New legislation comes into force on 6 March 2010 introducing significant changes to the tax treatment for authorised investment funds that make large investments in offshore funds. The changes are designed to ensure that the tax charge on disposals in said offshore funds is charged to UK resident investors rather that the authorised investment fund itself.
This change moves the point of taxation away from the fund and to the investors. This is because if the gains were taxed in the authorised investment fund then institutional and tax exempt investors in such funds would be disadvantaged compared with similar investors in offshore funds
The new legislation also reflects changes to the Financial Services Authority’s regulatory framework which also comes into force on 6 March 2010 as well as updating the list of qualifying investments for authorised investment funds.
Full HMRC guidance on the new legislation is expected to be issued shortly.