A provision buried in the budget has lifted the threat that offshore funds will lose their favourable tax treatment.
The government is to widen the scope of section 363A of the Taxation International and Other Provisions Act 2010 to remove the risk that offshore funds managed from the UK could be deemed UK resident for tax purposes.
Under the current legislation, a company can be designated as eligible for UK taxes if its central management and control functions are exercised in the UK. This will no longer be the case.
Non-UK Ucits funds were already exempt, and this budget’s tweak will extend that treatment to all alternative investment funds.
The budget also confirmed that Schedule 19 Stamp Duty Reserve Tax would be abolished for unit trusts and open-ended investment companies, as announced last year.
However, the charge will still be applied on non pro-rata in specie redemptions.