IFM13252 - Offshore Funds: participants in offshore funds: participants within the charge to corporation tax: income and distributions from non-reporting funds: 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 which is not a reporting fund will only be chargeable to tax on any distributions that they receive (or are treated as receiving, if a fund is ‘transparent’ for income purposes), prior to disposing of all or part of such an interest.

An offshore fund may take one of several forms. For instance, it may be 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 on the general tax rules relating to the form of income or distribution. For example, if income and distributions are received from a ‘bond fund’ (see IFM13266) the income would be taxed as loan relationship credit, or otherwise from a corporate fund then the income would be taxed as a foreign dividend.

Where a distribution is paid in a currency other than sterling the normal rules regarding the conversion rate into sterling will apply (see SAIM4310).

The detailed guidance regarding UK tax treatment of income from savings and investments can be found in the Savings and Investment Manual.