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HMRC internal manual

Offshore Funds Manual

From
HM Revenue & Customs
Updated
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Investors in non-reporting funds: distributions: the charge to tax: general

UK investors with an interest in a fund that falls within the definition of an offshore fund at section 355(1) TIOPA 2010 but that is not a reporting fund will, prior to disposing of all or part of such an interest, only be chargeable to tax on any distributions that they receive (or are treated as receiving, if a fund is ‘transparent’ for income purposes).

An offshore fund may take one of several forms - it may be, for instance, a company with share capital, a unit trust, or a contractual arrangement such as a Fonds Commun de Placement (‘FCP’). The tax treatment of income and distributions from each type of arrangement will depend on whether or not it is transparent for income and the general tax rules relating to the form of income or distribution (for example, if received from a ‘bond fund’ (see OFM13300) the income would be taxed as interest or otherwise from a corporate fund then the income would be taxed as a foreign dividend,

The detailed guidance regarding UK tax treatment of income from savings and investments can be found in the Savings and Investment Manual (‘SAIM’), which is available on the HMRC website at http://www.hmrc.gov.uk. The following pages provide a summary of the tax treatment of income from offshore funds.