IFM37210 - Charging Provisions: Charging provisions - Introduction

Charging provisions

TCGA92/S103KA – S103KB

TCGA92/S103KA provides that:

• where an individual performs investment management services for an investment scheme through an arrangement involving one or more partnerships; and
• carried interest arises to the individual under those arrangements,

then these carried interest rules will apply to compute the individual’s chargeable gain.

An investment scheme is defined within the disguised investment management fee (DIMF) legislation as either being a collective investment scheme (IFM36900) or investment trust (IFM36900) (ITA07/S809EZA(6)).

These rules are designed to ensure that individual fund managers are charged to tax on the full economic gain they receive from their performance- linked interest.

The legislation, in overview, provides that any sums arising in respect of carried interest under the arrangements will, after certain deductions, constitute a chargeable gain and be subject to capital gains tax. The deductions permitted are specified within TCGA92/S103KA(6) in computing the individual’s gain (IFM37236).