Consultation outcome

Contractual schemes for collective investment

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

This consultation has concluded

Download the full outcome

Detail of outcome

The establishment of a tax transparent fund vehicle is an important part of our programme to ensure the UK remains competitive as a fund domicile. The policy is highlighted in The UK investment management strategy, which was published as part of Budget 2013.

26 July 2013

The UK’s contractual schemes for collective investment main regulations are now available. Tax regulations for collective investment schemes, stamp duty and value added tax (VAT) have also been published.

25 March 2013

The Treasury received responses from a wide range of stakeholders. This response document summarises the main issues raised by respondents under the consultation questions and outlines the government’s response to these. We are very grateful to those who took the time to respond.

This is the formal response to the government’s consultation taking into account all of the feedback received. The consultation process we have taken has been both extensive and transparent.

We have accommodated feedback in relation to partnership schemes, investor protection safeguards, transferability of units, insolvency provisions and aspects of tax provisions. These were necessary in order to ensure the schemes were commercially workable for operators and attractive to investors. The Financial Services Authority consultation on the subsequent changes to the accompanying rules has now closed.

The government expects to lay the legislation which is appended to the formal response in the House shortly. Following Royal Assent, the Financial Services Authority will then pass the rules required which will then allow these schemes to be launched.

Original consultation


Seeking views on contractual schemes for collective investment

This consultation ran from

Consultation description


31 January 2013

The government is grateful for all the responses provided to the consultation on the introduction of Authorised Contractual Schemes. Respondents to the consultation included industry bodies, professional advisors, fund administrators and insolvency practitioners amongst others. The government has worked closely with the Financial Services Authority to incorporate feedback into the regulations as appropriate.

The regulations have been amended to take account of policy development in response to the feedback raised during the consultation period. The main changes have been in relation to the transfer of units and conditions for investment by retail investors. Other changes reflect discussion about the application of partnership and insolvency law. Further details will be set out in the formal consultation response to be published in due course.

The regulations have now advanced to the point where we will be in a position to lay them to Parliament upon the completion of final checks. The forthcoming FSA consultation paper on the revised rules for Authorised Contractual Schemes has been prepared by reference to the Regulations as published today. The FSA rules will enable the Authorised Contractual Schemes to be authorised and regulated.

The relevant tax regulations have also been updated and are available on the HM Revenue and Customs website (opens in a new window).

30 July 2012

We have notified all stakeholders who have expressed an interest in tax transparent funds that the regulations within the original consultation have been republished. We will invite further technical comments on the revised regulations until 3 September 2012.

29 June 2012

We have updated all stakeholders who have expressed an interest in tax transparent fund.


The government announced its intention in Budget 2011 to introduce a new, regulated, tax-transparent fund vehicle primarily to facilitate the setting up of pooled “Master Funds” under the Undertakings for Collective Investments in Transferable Securities IV Directive (UCITS IV).

The main objective of introducing contractual schemes is to ensure that the UK is able to compete to win an appropriate share of European pooled funds as UK domiciled funds and to consolidate the UK’s position as the largest asset management centre in Europe.

The UCITS IV directive, which was implemented in July 2011, introduces the ability for UCITS funds to establish master-feeder arrangements. However in order for a so called “master-feeder” structure to be attractive to investors on a cross-border basis the master fund needs to be a tax-transparent vehicle. As the Financial Services and Markets Act 2000 (FSMA) does not provide for the authorisation of tax-transparent collective investment schemes, it is currently not possible to have a tax-transparent UCITS master fund domiciled in the UK.

The measures outlined in this paper would allow for the authorisation of UK domiciled schemes established by contract and governed by the terms of a deed between the operator of the scheme and the investing participants.


The aim of this consultation is to gather views and evidence on the costs and benefits of the new fund vehicle, likely take up by industry and the tax and legal arrangements needed for it to be deployed effectively.

This consultation document explains the background to the government’s proposals, the structure of the vehicles, the required regulatory and tax legislation and sets out the expected benefits of introducing the contractual schemes.

HM Treasury would like to hear from all interested parties. Respondents should address any of the questions in the consultation document where they feel they can make a contribution, as well as offering any further comments they may have.

A separate consultation is being carried out covering legislation being introduced in the Finance Bill 2012 regarding the tax treatment of individuals in such collective investment schemes for the purpose of tax on capital gains.


Published 9 January 2012
Last updated 26 July 2013 + show all updates
  1. Updated page with links to new regulations 26/07/2013

  2. Response document published on 25/03/2013

  3. First published.