Will any returns from the sub-funds fail to be taxed in the UK as income (i.e. interest) rather than under the capital gains tax legislation?
It is the intention that all sub-funds will hold more than 60% by market value of their investments in either debt securities, money placed at interest, and/or certain other “qualifying” investments so that, under the rules for the taxation of corporate and government debt contained in the Finance Act 1996, Shareholders within the charge to UK corporation tax will be subject to tax as income on any fluctuations in the value of the shares. For UK resident individuals, providing the fund is certified as a distributing fund for UK distributor status purposes throughout the investor’s holding period, any capital returns on disposal will not be taxed in the UK as income. However, as long as all income is distributed and the Fund has a stable net asset value, there will be no such fluctuations in the value of the shares and therefore no such capital returns will arise on their disposal.
