B5.646 Investment managers—treatment of management fees
Finance Act 2015 introduced legislation to ensure that sums which arise to investment fund managers for their services for a collective investment scheme are charged to income tax1. It is intended to counteract planning devices which can result in some or all of the fees which are received by fund managers based on funds under management avoiding an income tax charge2.
The provisions relate to disguised fees arising to an individual from investment schemes (ie a collective investment scheme (see D8.101) or an investment trust (see D7.332)3). Where an individual at any time performs, or for sums arising on or after 6 April 2016, is to perform4, investment management services5 directly or indirectly6 for an investment scheme (for sums arising before 6 April 2016, the scheme7) under any arrangements (which for sums arising before 6 April 2016 only8, involve at least one partnership9), and under those arrangements a management fee (see below) arises to him (directly or indirectly for sums arising before 22 October 2015, see below for changes applying from that date10) from the scheme, some or all of which is untaxed (ie not charged on the individual for any tax year as employment income under ITEPA 2003 or brought into account in calculating the profits of his trade, profession or vocation for any tax year11), a 'disguised fee' is the untaxed amount12. The provisions come into effect on 6 April 2015, in respect of disguised fees arising on or after
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