Bringing asset holding companies to the UK with a new tax regime

14 June 2021

Going forward post Brexit the government aims to make the UK a more competitive jurisdiction for asset holding company structures. Rhiannon Kinghall Were and Alex Ereira have been closely involved in the development of the new regime; in an article drafted for Bloomberg Tax they discuss the new rules, the opportunities and the challenges.

The UK continues to lead the European asset management industry, with the largest market outside of the US, at over £9tn ($12.7tn) of assets under management. Despite that, rigid tax rules in the UK have resulted in asset management teams frequently acquiring investments into asset holding companies (AHCs) set up outside of the UK.

Luxembourg is a particularly popular choice, with a comparatively flexible tax regime allowing asset managers to set up reliable investment platforms while minimizing the risk of duplicative layers of tax for their investors.

Looking to the future of the investment management industry in a post-Brexit world, the U.K. government has been considering what would be needed to make the UK a more competitive jurisdiction for AHC structures.

Following two rounds of consultation over the last year, the government is now looking to entice asset managers back onshore with the anticipated launch of a new beneficial tax regime designed to remove the barriers to widespread use of UK AHCs. If successful, this regime could further cement the U.K.’s dominance in the industry, while delivering organisational and administrative benefits to UK funds.

This article considers how we expect the new rules to work, as well as highlighting the key challenges which the government faces in achieving its goal while limiting the tax benefits to genuine fund structures.

Read the full article on Bloomberg Tax.

This article was first published on Bloomberg's Daily Tax Report International.