Further information for UK Property Funds

21 October 2019

The UK Finance Act 2019 extended non-resident capital gains tax (“NRCGT”) to include disposals by non-UK residents of all UK property holdings (previously it only applied to disposals of residential property holdings). In addition, NRCGT has been extended to include all indirect property holdings, including those that are held via non-UK resident insurance policies and via “property rich” collective investment schemes. A property rich collective investment scheme is defined as a fund that has 75% or more of its value invested into UK property.

Although the new regime is effective from 6 April 2019, HMRC has only recently published draft guidance confirming how the tax will operate for property rich collective investment schemes. The new rules will impact non-UK residents holding units in such funds, which may make them less attractive from a tax perspective.

Friends Provident International (FPIL) are currently investigating how these changes will impact FPIL, and, whilst doing so, we are currently reviewing whether we will continue to permit investment into UK physical property funds longer term.

If you have any queries in relation to this matter, please contact TechnicalInvestments@fpiom.com.