Investment trusts

An investment trust is a pooled investment vehicle in the form of a listed UK tax resident public limited company. Despite its name, therefore, in legal terms an investment trust is a company and not a trust.

An investment trust enjoys certain UK tax benefits where it is approved by HMRC.

Investment trusts share many characteristics with collective investment schemes, however investment trusts are closed-ended fund vehicles and therefore do not constitute collective investment schemes. Investment trusts do qualify as alternative investment funds for regulatory purposes.

As a UK tax resident company, an investment trust is within the charge to UK corporation tax. However, where it has been approved by HMRC for a given accounting period it benefits from an exemption from UK corporation tax on chargeable gains. In addition, approved investment trusts are exempt from tax on certain profits or losses of a capital nature that would otherwise be taxed as income under the loan relationships or derivative contracts regimes.

Eligibility conditions and ongoing requirements

A company must meet the following eligibility conditions and ongoing requirements throughout each accounting period for which it wishes to

To view the latest version of this document and thousands of others like it, sign-in with LexisNexis or register for a free trial.

TAKE A FREE TRIAL

Latest Tax News

FTT holds that sales of occupation income provisions applied to capital sum received by the taxpayer (Rupert Grint v HMRC)

Tax analysis: In Rupert Grint v HMRC, the First-tier Tax Tribunal (FTT) found that the sales of occupation income anti-avoidance rules applied to a capital sum received by the taxpayer on the incorporation of his business. The anti-avoidance provisions were engaged as, although there were commercial reasons for the incorporation, one of the main objects of the arrangements was the avoidance or a reduction in income tax. The FTT also held that the closure notice was validly issued despite referring to the wrong legislative provision.

FTT holds discrimination settlement payment not taxable (L v HMRC)

Tax analysis: In L v HMRC, the First-tier Tax Tribunal (FTT) held that the part of a settlement payment which related to a discrimination claim fell outside the scope of income tax. This was on the basis that the payment was not ‘from employment’; instead it was made because the discrimination had deprived the former employee of the opportunity to perform her full role, causing financial loss.

FTT allows taxpayer’s R&D appeal (Stage One Creative Services Ltd v HMRC)

Tax analysis: In Stage One Creative Services Ltd v HMRC, the First-tier Tax Tribunal (FTT) allowed the taxpayer’s appeal, holding that it was entitled to research and development (R&D) relief under the pre-1 April 2024 regime for small and medium-sized enterprises (SMEs).

UT considers taxpayer’s application for permanent anonymity and third party disclosure request (HMRC v The Taxpayer and Others)

Tax analysis: The Upper Tribunal (UT) rejected a taxpayer’s application for permanent anonymity, following the taxpayer's decision to withdraw their substantive appeal with the First-tier Tax Tribunal (FTT). The UT further granted a third party limited access to the FTT’s previous case management decision. The UT’s decision emphasises the importance placed on open justice and highlights the court and tribunals’ reluctance to permit anonymity in litigation. Written by Helen McGhee, Partner, and Megan Durnford, Associate, at Joseph Hage Aaronson LLP.