United Kingdom introduces a new asset holding company (AHC) regime
As of 1 April 2022, the UK has introduced a new regime for the taxation of qualifying asset holding companies (QAHCs). This has been designed to enhance interest towards the UK as a location for asset management and the funds industry.
The new measure was first introduced in the 2020 March Budget, which was followed by the publication of draft legislation on 20 July 2021.
In order to be eligible for the new regime, QAHCs must meet certain criteria:
- Be UK tax resident
- Not be a UK REIT
- Be owned at least at 70% by institutional investors
- The main activity must be carrying on an investment business. Any other activities carried on must be ancillary to that main business and must not be carried on to a substantial extent
- The investment strategy must not involve the acquisition of listed equity securities.
This regime includes a series of new key tax features:
- QAHCs are completely exempted for gains on disposals of certain shares and overseas property
- QAHCs repurchasing their share capital from an individual can treat the premiums paid as capital rather than income distributions
- QAHCs are not subject to withholding tax when paying interest
- QAHCs are exempted from stamp duty and stamp duty reserve tax (SDRT) in the case of a repurchase of share and loan capital it has previously issued
- QAHCs activities are ring-fenced between qualifying and non-qualifying activities.
When enrolling in the scheme, the QAHC will enter a new accounting period and its previous accounting period will end.
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