The investment manager exemption for private clients

Published by a ��Ӱ�� Private Client expert

Practice notes

The investment manager exemption for private clients

Published by a ��Ӱ�� Private Client expert

Practice notes

The main purpose of the Investment Manager Exemption (IME) is to prevent a UK-based Investment Manager (IM) from being assessable as a branch or agent of a non-resident Client, where the manager is trading in investments on behalf of the client. Where the client is an individual or trust, the client would, in the absence of the IME, be subject to income tax and capital gains tax (CGT) on their profits.

The IME was originally enacted in section 127 of the Finance Act 1995, but has been extended and is now enacted in very similar terms in the following three places:

•
UK source income generated through a broker/IM qualifies for non-resident income tax relief. This exemption is part of the code of non-resident IT relief set out in Chapter 1 Part 14 of the Income Tax Act 2007 (ITA 2007)
a broker/IM is not a UK representative for income tax and CGT. The main significance of this is to disapply the rules allowing the collection of income tax and CGT from the UK representatives

Jurisdiction(s):

United Kingdom

Key definition:

Investment definition

What does Investment mean?

An investment will typically mean any type of property or interest held within the territory of the host state. This will often extend far beyond 'obvious' property, such as real estate or shares in a local company, to (depending upon the circumstances) other interests such as rights under a contract, intellectual property rights and private loans. As with the concept of 'investor,' in the modern commercial world what does and does not qualify as investment can be a complex question. The definition of 'investment' will vary between BITs.

��Ӱ��