In order to retain reporting fund status, a reporting fund must comply with certain ongoing requirements set out in Part 3 of the Offshore Funds (Tax) Regulations 2009, SI 2009/3001 (the Offshore Funds Regulations). These include requirements as to the accounting policy used by the fund, the requirement to calculate ‘reportable income’, and the need to make reports and certain other information available to investors and HMRC. Compliance with these requirements is seen as important to ensure that the reporting fund regime works as intended. Therefore, as offshore funds will not otherwise be within the jurisdiction of HMRC (by virtue of being 'offshore'), sanctions are made available to HMRC within the offshore funds legislation to address any breaches of these requirements. Where there is a breach of the requirements placed on a reporting fund, the intention is that any consequence should be reasonable and proportionate. Breaches are therefore classed as ‘minor’ or ‘serious’. Where a reporting fund commits a ‘serious’ breach of the requirements of the regulations,

This Practice Note looks at the UK tax treatment of interests held in offshore funds that are not reporting funds. In particular, it examines the computation and taxation of offshore income gains (ie on a disposal of an interest held in a non-reporting offshore fund) and the tax treatment of distributions. Note that it does not specifically consider the position of any investors in offshore funds who may previously have benefitted from the remittance basis of taxation for non-UK domiciled individuals (that was abolished from 6 April 2025) and/or those who are currently eligible to utilise the four-year foreign income and gains (FIG) regime. For more on this area of individual taxation, see Practice Notes: The abolition of the remittance basis of taxation from 2025–26 and Foreign income and gains regime from 6 April 2025. What is a non-reporting offshore fund? A non-reporting offshore fund is any offshore fund which does not have reporting fund status for a particular period of account. (For information on offshore funds that do have reporting

UK investors in ‘reporting’ offshore funds are charged to tax on their share of the fund’s ‘reported income’ each year (regardless of whether that income is distributed to them or accumulated). This enables them to benefit from capital gains treatment on a disposal of their investment. By contrast, when UK investors in ‘non-reporting’ offshore funds realise any gains on disposals of their investments, these gains are taxed as income instead of as capital gains. Such gains are known as ‘offshore income gains’. Offshore funds must apply and be accepted for reporting fund status. For the eligibility criteria and process for applying for reporting fund status, see Practice Note: Tax and offshore funds—the reporting fund regime. For more on offshore funds that are non-reporting and the tax treatment of their investors, see Practice Note: Tax and offshore funds—non-reporting funds. For what offshore funds are, see Practice Note: Tax and offshore funds—what is an offshore fund? In high level terms, reporting offshore funds ‘report’ their income to UK investors

This Practice Note describes the reporting fund regime within the offshore funds tax rules. It looks at how an offshore fund applies for reporting fund status, the effect of entering the reporting fund regime, and points out certain modified rules that apply to constant net asset value (NAV) funds. It also describes the application process for seeking clearance that a particular reporting fund is a ‘diversely owned fund’. ‘Diversely owned funds’ are able to benefit from the ‘investment transactions list’ with the result that certain fund transactions are guaranteed to be treated as non-trading for the purposes of calculating the fund’s reportable income. What is a reporting fund? A ‘reporting fund’ is an offshore fund that has been approved as a reporting fund, and which has not left the reporting fund regime (either voluntarily or by virtue of having been excluded). In short, UK investors in ‘reporting funds’ are charged to tax on their share of the fund’s reported income each year, regardless of whether that income is distributed to

Background to the UK’s offshore funds rules Specific tax legislation dealing with offshore funds was first introduced in 1984. Before that time, UK investors in non-UK investment vehicles had been able to roll up income offshore, and when their investments were realised (for example on a sale of their interest) tax was paid at the capital gains rate as opposed to income tax rates. The ‘offshore funds’ tax regime, introduced in 1984, combatted this by taxing as income any gains realised on disposals of material interests in ‘offshore funds’. The concept of an ‘offshore fund’ was defined for tax purposes using a regulatory definition. Certain rules provided an exemption from this treatment where a given offshore fund distributed at least 85% of its income and UK equivalent profits to investors each period. Where an offshore fund made such distributions, a disposal by an investor of their interest in the fund retained capital gains tax treatment. The purpose behind the 1984 legislation was to ensure consistent tax treatment of interests

This Practice Note sets out the key UK tax rates, thresholds and allowances. This Practice Note is intended as a quick reference guide, not a comprehensive resource. It covers the main rates, thresholds and allowances for UK resident individuals and companies. For more historical and further information on rates, thresholds and allowances, see: Whillans Tax Tables. For more general information on tax rates outside those most relevant to share incentive lawyers, see Practice Notes: Key UK tax rates, thresholds and allowances and Key UK tax rates, thresholds and allowances for Private Client. PAYE Income tax rates for individuals For participants in share incentives, the following income tax rates and bands will apply: Rate 2025–26 2026–27 Basic rate Rate: 20%Band: £0–£37,700 Rate: 20%Band: £0–£37,700 Higher rate Rate: 40%Band: £37,701–£125,140 Rate: 40%Band: £37,701–£125,140 Additional rate Rate: 45%Over £125,140 Rate: 45%Over £125,140 *These bands apply after the personal allowance of non-taxable income. The basic rate limit was set at £37,700 from 6 April

This Practice Note looks at VAT issues arising in the context of private equity funds. It assumes a typical UK private equity fund structure where the fund is constituted as a limited partnership. (For a closer look at how a typical UK private equity fund is structured, see Practice Note: Tax and private equity funds—fund structure. This Practice Note considers the VAT treatment of: • investments into a limited partnership fund • transfers of interests in a limited partnership fund • the priority profit share received by the general partner • whether VAT should be charged on the supply of advice and management services to a private equity fund For more information on VAT generally, see Practice Note: VAT basic principles—overview. Relevance of EU law This Practice Note makes references to EU Directives and EU Court of Justice (CJEU) case law. For guidance on the extent to which EU case law continues to be relevant to UK taxpayers post-Brexit, see Practice Notes: Assimilated law and Assimilated law and tax. When the

FORTHCOMING CHANGE relating to the tax treatment of carried interest: Following a call for evidence on the tax treatment of carried interest that ran over summer 2024, at Autumn Budget 2024 the government announced that it would introduce a revised tax regime for carried interest from 6 April 2026 that would sit within the income tax framework, subject to special rules to take account of the unique characteristics of the reward. A consultation on potential new qualifying conditions for access into the new regime followed, with a government response to this being issued in June 2025. Draft legislation for the new tax regime for carried interest was published on 21 July 2025, for inclusion in Finance Bill 2026. The new rules will have effect for carried interest arising on or after 6 April 2026. All this was confirmed at the Budget on 26 November 2025, where it was also noted that some changes had been made to the draft legislation to reflect stakeholder feedback. Pending the coming into force of the new regime,

FORTHCOMING CHANGE relating to the tax treatment of carried interest: Following a call for evidence on the tax treatment of carried interest that ran over summer 2024, at Autumn Budget 2024 the government announced that it would introduce a revised tax regime for carried interest from 6 April 2026 that would sit within the income tax framework, subject to special rules to take account of the unique characteristics of the reward. A consultation on potential new qualifying conditions for access into the new regime followed, with a government response to this being issued in June 2025. Draft legislation for the new tax regime for carried interest was published on 21 July 2025, for inclusion in Finance Bill 2026. The new rules will have effect for carried interest arising on or after 6 April 2026. All this was confirmed at the Budget on 26 November 2025, where it was also noted that some changes had been made to the draft legislation to reflect stakeholder feedback. Pending the coming

FORTHCOMING CHANGE relating to the tax treatment of carried interest: Following a call for evidence on the tax treatment of carried interest that ran over summer 2024, at Autumn Budget 2024 the government announced that it would introduce a revised tax regime for carried interest from 6 April 2026 that would sit within the income tax framework, subject to special rules to take account of the unique characteristics of the reward. A consultation on potential new qualifying conditions for access into the new regime followed, with a government response to this being issued in June 2025. Draft legislation for the new tax regime for carried interest was published on 21 July 2025, for inclusion in Finance Bill 2026. The new rules will have effect for carried interest arising on or after 6 April 2026. All this was confirmed at the Budget on 26 November 2025, where it was also noted that some changes had been made to the draft legislation to reflect stakeholder feedback. Pending the coming into force of the new regime,

FORTHCOMING CHANGE relating to the tax treatment of carried interest: Following a call for evidence on the tax treatment of carried interest that ran over summer 2024, at Autumn Budget 2024 the government announced that it would introduce a revised tax regime for carried interest from 6 April 2026 that would sit within the income tax framework, subject to special rules to take account of the unique characteristics of the reward. A consultation on potential new qualifying conditions for access into the new regime followed, with a government response to this being issued in June 2025. Draft legislation for the new tax regime for carried interest was published on 21 July 2025 for inclusion in Finance Bill 2026. The new rules will have effect for carried interest arising on or after 6 April 2026. All this was confirmed at the Budget on 26 November 2025, where it was also noted that some changes had been made to the draft legislation to reflect stakeholder feedback. Pending the coming into force of

This Practice Note describes the role and tax treatment applicable to the general partner in a UK limited partnership private equity fund. It covers, in particular: • the role played by the general partner • how the general partner is remunerated • the tax treatment of fund expenses • the management fee • some key considerations where the fund (and general partner) is a non-UK entity, and • issues to consider when the general partner is a limited liability partnership or a Scottish limited partnership (rather than a UK limited company) For more on the structure of UK private equity funds generally, including the role of the fund manager and some wider tax issues, see Practice Note: Tax and private equity funds—fund structure. Note that this Practice Note does not deal with the application of the disguised investment manager (DIMF) rules, which may be relevant to amounts received by the general partner. For more on the DIMF rules, see Practice Note: The disguised investment management fee (DIMF) rules. Most of this