UK Funds Review


In the 2020 Budget, the government announced a review of the UK’s funds regime. The purpose of the review is to identify ways to make the UK a more attractive destination to set up, manage, and administer funds, as well as facilitate the development of a wider range of investment options. This latter objective is supported by initiatives already being taken forward as part of the review, including a new tax regime for qualifying asset holding companies (QHAC) and introducing the Long-Term Asset Fund (LTAF) structure.

AIMA and the ACC have submitted a response to the UK Government’s call for input to its review of the UK funds regime (see here for more background).   

On 10 February, Treasury published the government’s response to the feedback it received as part of last year’s call for input on the wider components of the review, as well as next steps the government will take. Following the call for input, the government (and where appropriate, FCA) will work to:

  • Make the taxation of funds simpler and more efficient, including in relation to the genuine diversity of ownership (GDO) requirement, Real Estate Investment Trusts (REITs), and solutions to address the tax efficiency of multi-asset authorised funds.
  • Grow the range of investment products available in the UK, including fund structures permitted to distribute capital.
  • Explore opportunities to support the wider funds environment, including by providing information concerning the fund authorisation process and promoting the UK funds regime overseas.
  • Enhance the UK funds regime via a consultation on options to simplify the VAT treatment of fund management fees. The VAT consultation, to be published in the coming months, will not look at a zero-rate for fund management fees. It will, however, examine options to improve and simplify the VAT regime for fund management. A zero rating for fund management will not be considered.
  • LTAF and the QAHCs: Ongoing work on facilitating the introduction of the Long-Term Asset Fund (LTAF) structure and the new tax regime for qualifying asset holding companies in certain fund structures will continue.

Upcoming actions:

HM Treasury is planning to re-engage with stakeholders to take forward this next stage of work.

(Last updated: 15 February 2022)