This part of GOV.UK is being rebuilt – find out what beta means

HMRC internal manual

Offshore Funds Manual

Introduction: overview of the 1984 regime

This manual explains how UK resident investors in offshore funds are treated for tax purposes. It sets out the background to the offshore funds tax regime that applied to UK investors in offshore funds from 1984 onwards, and provides detailed guidance explaining how UK investors are treated under the replacement regime now at Part 8 of the Taxation (International and Other Provisions) Act 2010 and the Offshore Funds (Tax) Regulations 2009 (SI 2009/3001) as subsequently amended by SI 2009/3139 and SI 2011/1211.

Please note that, unless otherwise stated, all references in the OFM to Regulations or a particular regulation are a reference to the Offshore Funds (Tax) Regulations 2009 (including amendments made up to May 2011) unless otherwise stated.

If you have any comments or questions on the contents of this manual please direct them to the HMRC Collective Investment Schemes Centre (CISC) who will maintain a list of any issues to be addressed. See also the list of Frequently Asked Questions on the CISC website.

The previous regime, introduced in 1984, was based on the definition of an ‘offshore fund’ in Chapter 5 of Part 17 ICTA 1988. Where a UK investor held a ‘material interest’ in an offshore fund, as defined in that Chapter, then any gains realised on disposals of such an interest were charged to tax as income, unless certain conditions were met.

Broadly, the conditions were that the fund had distributed at least 85% of the higher of its income or UK equivalent profits (‘UKEP’) to its investors. The fund had to apply for and obtain approved status from HMRC, in arrears, for each period of account in order for its investors to be able to be taxed on realisations under the more favourable capital gains rules.

Fund managers, or persons acting on their behalf, who require more detailed information regarding the operation of the 1984 regime should refer to the Offshore Funds Guide which is available on the HMRC website, or contact the Collective Investment Schemes Centre at

Collective Investment Schemes Centre (CISC)
1st Floor South
Concept House
5 Young Street
S1 4LB

Liz Foster: Tel 0114 2969 377 Sandra Whyman: Tel 0114 2969 688

Investors who require more detailed information regarding how distributions and gains on realisations are taxed under the 1984 regime should refer to the guidance in the Savings & Investment Manual (SAIM) available on the HMRC website.