(July 21, 2015)

On July 20, 2015 the UK HM Revenue and Customs published a guidance titled: “Investment managers: Capital Gains Tax treatment of carried interest (July 2015)”. The document supposedly gives guidance on the Capital Gains Tax treatment of carried interest legislation announced at Summer Budget 2015 which will have effect from July 8, 2015.

The Guidance discussed a.o. the following subjects:

·        Introduction;

o       Summary of Legislation: Investment Managers: Capital Gains Tax Treatment of Carried Interest. Sections 103KA – KF, Part III, Taxation of Chargeable Gains Act 1992;

o       Operative date;

·        Chapter 1: Background to legislation;

o       Carried Interest;

o       Previous taxation of carried interest;

·        The main provisions and effects of the legislation;

o       Proposed legislation;

o       Summary of legislation;

o       Carried interest ‘arising’ to an individual;

o       Items chargeable to income tax;

o       Allowable deductions;

o       Disposals of carried interest;

o       Relief for payments to acquire rights to carried interest;

o       Foreign chargeable gains;

o       Prevention of double taxation;

o       Anti-avoidance;

o       General interaction with DMF rules;

·        Chapter 3: Examples;

o       Example 1 – Private equity manager receiving carried interest;

o       Example 2 – Private equity manager receiving carried interest within employment-related securities rules;

o       Example 3 – Private equity manager in receipt of carry comprising capital and income items;

o       Example 4 – Hedge fund manager receiving performance fee;

o       Example 5 – Non-UK Services;

·        Appendix –’Base cost shift’;

Click here to be forwarded to the Guidance as published by the HMRC on GOV.UK, which will open in a new window.

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