IFM02310 - Authorised investment funds (AIFs): qualified investor schemes (QISs) and long-term asset funds (LTAFs): introduction

Qualified Investor Scheme (QIS)

A QIS is a type of authorised investment fund (AIF) which is only open to qualified investors. Like other AIFs, a QIS is subject to regulation by the Financial Conduct Authority (FCA). A QIS has wider investment and borrowing powers than UK UCITS or NURS (see IFM02110 for explanations of those terms) but is subject to lighter regulation because investment in a QIS is open only to qualified investors.

Qualified investors include professional investors, such as institutional investors (such as pension funds and charities) or sophisticated individual investors who regularly invest significant sums and can be expected to understand the risks involved in a wide range of investments.

Such investors may be in a position to have significant influence over the investment strategy of a fund in which they have a significant holding. The tax rules for QISs therefore stipulate conditions designed to ensure that the tax benefits that apply to AIFs only apply to QISs which are widely marketed, rather than closely held for the benefit of a few pre-determined individuals, so that they meet the ‘genuine diversity of ownership condition’ (GDO) (see IFM17000).

Long-term Asset Fund (LTAF)

An LTAF is another type of AIF, which is regulated by the Financial Conduct Authority. Similarly to a QIS, the LTAF is also only open to professional investors and must meet the GDO condition, or be treated as meeting the GDO condition (see IFM02320).

Tax treatment of a QIS and LTAF (the taxation of the fund)

The tax rules that apply to AIFs in general, only apply to a QIS or an LTAF if it meets the GDO, or in the case of an LTAF is treated as meeting the GDO. Where the GDO is not met, the QIS or LTAF is taxed like a normal company, but without the benefit of the small companies’ rate of corporation tax due to take effect from 1 April 2023.