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Last updated: 2 Dec 2021
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Introducing the UK’s qualifying asset holding company regime

The release of the draft finance bill introduced a new elective Qualifying Asset Holding Company (QAHC) regime, effective from April 2022. The regime is part of a wider review by the government to make the UK funds market more competitive and attract asset holding to the UK.

Over the last 18 months, the UK government has been consulting on the introduction of a QAHC regime.  As highlighted in our previous insight, the QAHC regime is a welcome introduction and will hopefully be successful in making the UK an even more attractive jurisdiction of choice for private equity and other private capital, illiquid asset classes.

The consultation process comprised two stages of consultations and culminated in the publication of the recent draft finance bill, setting out the tax framework for the new QAHC regime.

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Antoine Housden

+44 (0)207 710 3121
housdena@buzzacott.co.uk
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Over the last 18 months, the UK government has been consulting on the introduction of a QAHC regime.  As highlighted in our previous insight, the QAHC regime is a welcome introduction and will hopefully be successful in making the UK an even more attractive jurisdiction of choice for private equity and other private capital, illiquid asset classes.

The consultation process comprised two stages of consultations and culminated in the publication of the recent draft finance bill, setting out the tax framework for the new QAHC regime.

Is my company a QAHC?

Is my company a QAHC?

A company is a QAHC if it is resident in the UK and meets a number of conditions.  

One of the conditions is that the company must be at least 70% owned by diversely owned funds managed by regulated managers, or certain institutional investors.

Another of the conditions to be eligible to enter the QAHC regime is the main activity of the company is investing its funds with the aim of spreading investment risk and giving investors in the company the benefit of the results of the management of its funds.

Some of the advantages of the regime include, among others:

  • An exemption from tax on capital gains on certain shares and overseas property received by the QAHC
  • An exemption from tax on overseas property income provided it is subject to tax locally
  • An exemption from stamp duty and stamp duty reserve tax on QAHC share buybacks
  • Capital gains tax treatment on the premium paid on QAHC share buybacks from individuals
  • Disapplying the requirement to levy withholding tax on payments of interest to QAHC investors
  • Allowing certain amounts paid to remittance basis users by a QAHC to be treated as non-UK source reflecting the mix of underlying returns from the UK and overseas
  • Allowing deductions for certain interest payments that might otherwise be disallowed

There are numerous entry and exit provisions that will need to be considered, including creating a new accounting period on entering or leaving the regime.  

It should also be noted that, the small and medium enterprise exemption from transfer pricing will not be available for QAHCs.

Speak to an expert 

If you wish to know more about the advantages of the new UK QAHC regime, would like to discuss potentially applying for entry into the regime, or need support to remain compliant with the regime for your UK fund structure, please do not hesitate to contact us.

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