Collectives: exemptions: exempt investments - interests in other collective investment schemes
The terms of a Collective Investment Scheme (such as a unit trust or Open-Ended Investment Company (OEIC)) may permit investment by the scheme solely in the holding of ‘exempt’ investments’ or a mixture of both ‘exempt’ and ‘non-exempt’ investments.
FA86/S99(5A)(b) provides that no Stamp Duty Reserve Tax (SDRT) charge arises under FA86/S87 (or FA99/SCH19 where units or OEIC shares are surrendered back to the fund before 30 March 2014) when units or OEIC shares in the scheme are transferred and the fund consists only of ‘exempt’ investments.
Similarly, Paragraph 5 of FA99/SCH19 permits a reduction in the amount of SDRT due under FA99/SCH19 where a fund holds both ‘exempt’ and ‘non-exempt’ investments.
Section 99(5B) Finance Act 1986 (for the purposes of both FA86/S87 and FA99/SCH19 ) provides rules for determining when an investment is regarded as exempt and differ for:-
- Direct investments held other than an interest under a collective investment scheme, (See STSM105020 ) and
- Investments that are holdings in other Collective Investments Schemes (such as unit trusts and OEICs).
Investment holdings in other Collective Investment Schemes
An investment in a Collective Investment Scheme is to be regarded as an exempt investment under FA86/S99(5B)(b) if, and only if, both:
- The underlying scheme is a Collective Investment Scheme as defined in the Financial Services and Markets Act 2000 (FSMA);
- The value of the underlying scheme’s non-exempt investments is no more than 20% of the value of its total investments.
The FA99/SCH19 charge applies only to units and OEIC shares which are surrendered and transferred prior to 30 March 2014. See STSM103005.
See STSM101010 for the meaning of a collective investment scheme.
See STSM101020 for the meaning of a unit trust.
See STSM101050 for the meaning of an OEIC.