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HMRC internal manual

Investment Funds Manual

Offshore Funds: deduction of offshore income gains in computing capital gains: introduction

Regulation 44 of SI 2009/3001

A disposal of an interest in an offshore fund may give rise to an offshore income gain but because the rules relating to when a disposal arises are based on the rules for disposals for capital gains purposes within TCGA 1992, with suitable modifications, it is likely that there will be a disposal for the purposes of capital gains as well.

Clearly, to apply two separate charges (one on income on any offshore income gain, and one on any capital gain) would potentially lead to double taxation. There are therefore provisions within the regulations that set out how to calculate capital gains when an offshore income gains arises on a disposal. Those provisions are explained in the following pages.