INTM269120 - Non-residents trading in the UK: through UK investment managers, brokers or Lloyd’s agents: the 20% rule: qualifying period of no more than 5 years: example

Years	1	2	3	4	5
Taxable income of non-resident	100	200	200	250	250
Entitlement of manager to above	32	58	40	35	5
Expressed as percentage of each year	32%	29%	20%	14%	2%
Average cumulative percentage over qualifying period	32%	30%	26%	22%	17%

It may be assumed that the test is satisfied for year 1 because (a) in this example it was the manager’s intention to have a beneficial entitlement to an average of 20% or less in aggregate over a five year period and (b) that intention was fulfilled. Had the 20% beneficial entitlement been achieved before the five years were complete, then that shorter period would have been the qualifying period. A second qualifying period of up to five years could include years 2, 3, 4, 5 and 6 and so on.