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HMRC are set to introduce a brace of statutory instruments to address the tax treatment of trail commission paid to non-resident investors.
March’s Revenue & Customs Brief 4/13 discussed the latest handling of payments made to investors in collective investment schemes and other insurance products where the money did not arise as a distribution from the investment but was made to the investor by the fund manager or other intermediary.
HMRC are set to introduce a brace of statutory instruments to address the tax treatment of trail commission paid to non-resident investors.
March’s Revenue & Customs Brief 4/13 discussed the latest handling of payments made to investors in collective investment schemes and other insurance products where the money did not arise as a distribution from the investment but was made to the investor by the fund manager or other intermediary.
The tax department has since found that the treatment is not in line with general policy for other payments from collective investment schemes made to non-resident investors.
Two new statutory instruments will amend the Authorised Investment Funds (Tax) Regulations 2006 and the Offshore Funds (Tax) Regulations 2009, removing the obligation to deduct basic rate income tax before making payments to investors in connection with management charges paid by the fund to its manager.
The change will ensure that non-UK resident investors are not subject to a basic-rate income tax deduction on UK-originated payments derived from investment in a UK-based or an offshore fund where the payment is linked to the management charges paid by the fund, and where the investors would not be subject to the deduction of basic rate income tax on a distribution from the fund.
