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Feb 19, 2019 · In addition to navigating the normal employment tax and disguised remuneration concerns that come with making loans to employees, it is worth noting that most UK companies that are owned by private equity funds are likely to be ‘close’ for UK tax purposes.
- Background
- VAT
- Multi-Asset / Balanced Funds and Tax Exemption
- REITs
- Tax Treaty Issues
- Limited Partnership Funds
- Long Term Asset Funds
- New Unauthorised Fund Structure
- Comments
At Budget 2020, the government announced a wide-ranging review of the UK’s funds regime, covering both tax and regulation, and in January 2021, published a formal Call for Input. The overarching objective of the review is to identify options which will make the UK a more attractive location to set up, manage and administer funds. This objective und...
From a tax perspective, the top priority item identified by respondents was the review of the VAT treatment of fund management, specifically to ensure that the treatment of fund management in the UK is competitive, uncertainties and complexities are addressed and importantly that the case for zero-rating is considered. This was a position echoed in...
The Call for Input recognised that multi-asset funds can be tax inefficient due to the tax paid on income from interest bearing investments and derivative contracts. The Call for Input put forward a number of possible solutions for consideration. Having analysed responses, the government intends to continue to work to address the tax inefficiencies...
The Call for Input saw strong support for the UK REIT regime to be made more attractive. As a result, the government has announced that it will establish a new workstream as part of the UK funds regime review to evaluate the options for further reform. The workstream will determine which specific proposals will be taken forwards, such as removing t...
Responses to the government Call for Input on treaty issues stressed the importance of the UK’s treaty network and highlighted a number of issues. These included lack of future access to the Interest and Royalties Directive and the Parent Subsidiary Directive following Brexit. Respondents suggested that replacement bilateral agreements should be pr...
The Call for Input sought to understand any barriers to the use of limited partnership funds (LP funds) in the UK and invited suggestions for improvements. Respondents identified a number of tax barriers, including administrative complexity around partnership reporting rules and the tax implications of the stamp duty and SDLT rules applying to tran...
The Call for Input also looked at the tax rules for the new LTAFs. The response document confirms that now that the regulatory detail for LTAFs is finalised, the government will conduct further discussions in relation to the taxation of these funds. On an interim basis, regulations came into force in December 2021 that extended the UK taxation regi...
A particular issue raised with the government by the asset management sector was the gap in the range of authorised fund structures offered in the UK, and the lack of an option for a flexible, tax efficient, unauthorised fund aimed only at professional investors and that can invest in alternative asset classes. It was noted that for such a structur...
The result of the Call for Input is that the government will now take forward a number of a number of areas of work including, from a tax perspective: 1. A review of the genuine diversity of ownership (GDO) condition; 2. Further consideration of options to improve the tax efficiency of UK authorised funds, and in particular multi-asset funds; 3. A ...
Nov 9, 2020 · It led to an agreement that, even today, allows private equity executives in the UK to pay lower tax rates, on their multi-million-pound bonuses, than workers pay on annual wages over...
A review of the primary tax considerations for private equity funds in United Kingdom, including the scope of tax liability, exemptions and applicable tax treaties.
Apr 16, 2021 · A look at the key legal and practical issues surrounding the taxation of private equity fund vehicles in United Kingdom, including filing requirements and applicable tax treaties.
Dec 16, 2022 · As part of this review the UK government promised to introduce a new tax regime for qualifying asset holding companies (QAHCs) in certain fund structures and explore ways to simplify the VAT treatment of fund management fees for UK domiciled funds.
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Are private equity funds taxable in the UK?
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This Practice Note sets out how the investors in a typical UK private equity fund might be subject to UK taxation on their share of the fund's profits. One of the reasons for the popularity of the limited partnership as a structure for private equity funds is that English and Scottish limited partnerships are transparent for the purposes of ...
