UK asset holding company regime

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.

UK asset holding companhy regime

Asset classes

Private equity

To date the UK has only been used as an asset holding location by the most determined. Typically private equity funds tend to be structured with tax transparent limited partnerships formed to pool investment from investors, with the assets almost uniformly held through a company to provide a liability shield. It is vital that this company does not impose a layer of tax other than what the ultimate investor would have paid had they invested directly in the underlying asset.

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Credit

To date, the UK has only been used as an asset holding location by the most determined. Typically credit funds tend to be structured with tax transparent limited partnerships formed to pool investment from investors, with the assets almost uniformly held through a company to provide a liability shield. It is vital that this company does not impose a layer of tax other than what the ultimate investor would have paid had they invested directly in the underlying asset.

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In depth