Offshore Funds

Question 1

Describe what type of income an offshore fund produces?

Answer 1

If it is predominantly Fixed Interest then it pays out interest Net of BRT, if it is predominantly Equity, it pays out Dividends which are paid gross

Question 2

How does an offshore apply and keep it’s reporting status? 3 answers

Answer 2

1. By applying to HMRC for reporting status
2. Must inform HMRC and individual investors of all income and gains so individual investors can complete a tax return
3. It will keep its status as long as it complies with the reporting rules

Question 3

What is the difference in tax treatment between a reporting and non reporting fund?

Answer 3

Reporting Fund:
Income - Interest payable at 20%, personal allowance available
Capital Gains - Payable at 10 or 20% CGT exemption available
Non reporting Fund
Income payable at 20/40 or 45% no personal allowance available
Not subject to capital gains tax