37 Income-based carried interest
Finance Act 2016 (2016 c 24) | Legislation

37  Income-based carried interest

(1)     In Chapter 5E of Part 13 of ITA 2007 (tax avoidance: disguised investment management fees), in section 809EZB(1) (meaning of “management fee”), for paragraph (c) substitute—

“(c)     carried interest which is not income-based carried interest (see sections 809EZC and 809EZD for carried interest, and Chapter 5F for income-based carried interest).”

(2)     After Chapter 5E of Part 13 of ITA 2007 insert—

“Chapter 5F
Income-Based Carried Interest

Income-based carried interest

809ܴ

(1)     This Chapter determines when carried interest arising to an individual from an investment scheme is “income-based carried interest” for the purposes of Chapter 5E (and, in particular, section 809EZB(1)(c)).

(2)     Section 809FZB contains the general rule, under which the extent to which carried interest is income-based carried interest depends on the average holding period of the investment scheme.

(3)     Sections 809FZC to 809FZP contain further provision relating to average holding periods.

(4)     Sections 809FZQ and 809FZR contain a particular rule for direct lending funds.

(5)     Sections 809FZS and 809FZT contain an exception to the general rule for carried interest which is conditionally exempt from income tax.

(6)     Sections 809FZU to 809FZZ contain supplementary and interpretative provision.

(7)     Nothing in this Chapter

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