In spring 2022, the UK will introduce a new asset holding company (AHC) regime which will allow investment funds to base their “under the fund” investment holding structures in the UK rather than Luxembourg or Ireland.
Private equity, credit and real estate funds generally hold their investments through an AHC in Luxembourg or (less often) Ireland as the UK has not historically been a suitable jurisdiction for an AHC due to its tax rules. However the UK government is looking to entice AHCs to the UK with the launch of a dedicated tax regime for UK AHCs.
In a nutshell, the new UK AHC regime:
- is suitable for private equity, credit, and real estate investments;
- provides tax neutrality;
- offers access to tax treaties to mitigate investee country taxes;
- offers a wide capital gains exemption;
- allows capital gains repatriation to UK investors; and
- does not impose withholding tax on distributions and interest.
Download our detailed guide below that walks through the draft legislation. We provide our unique insight into the regime having been involved in the development from inception to implementation.