IFM13320 - Offshore Funds: participants in offshore funds: participants within the charge to income tax: reporting funds: income and distributions: corporate offshore funds

Regulation 95 – corporate offshore funds of SI 2009/3001

Distributions made to participants chargeable to income tax as well as the excess calculated under regulation 94(1) are charged to income tax as offshore fund distributions treated as interest under s378A ITTOIA 2005 or as dividends from non-UK resident companies under s397A ITTOIA 2005 for the year of assessment in which the distribution is made.

Until 22 April 2009, dividends received from offshore funds did not carry any entitlement to a dividend tax credit. From that date until 5 April 2016, dividends from offshore funds carry an entitlement to a dividend tax credit. From 6 April 2016 such dividends no longer carry an entitlement to a tax credit. Any sums treated as an excess of reported income will carry an entitlement to a tax credit where an actual distribution payable on the fund distribution date (regulation 94(4)) would carry a tax credit.

Bond funds

Where an offshore fund holds more than 60% of assets in interest-bearing (or economically similar) form, any distribution or excess of reported income is treated as a payment of yearly interest (section 378A ITTOIA 2005 / regulation 95(3)). The income tax rates that apply are those applying to interest. Fund managers or advisers should be able to tell UK investors if a fund is a bond fund, and investors are responsible for determining this.