Investment trusts

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An investment trust is a pooled investment vehicle in the form of a listed UK tax resident public limited company. Despite its name, therefore, in legal terms an investment trust is a company and not a trust.

Where an investment trust is approved by HMRC, it enjoys certain UK tax benefits.

Investment trusts share many characteristics with collective investment schemes. However, as investment trusts are closed-ended fund vehicles (because they have a fixed capital structure) they do not constitute collective investment schemes. Investment trusts are not authorised by the Financial Conduct Authority. They do however have to comply with UK Listing Rules and UK company law. Investment trusts qualify as alternative investment funds for regulatory purposes.

As UK tax resident companies, investment trusts are within the charge to UK corporation tax. However, where a fund has been approved by HMRC as an investment trust for a given accounting period it will benefit from an exemption from UK corporation tax on chargeable gains. In addition, approved investment trusts are exempt from tax on certain profits or losses of a capital nature that would otherwise be taxed

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