UK Qualifying Asset Holding Company (QAHC)

In 2020 the UK government announced a review of the UK Funds regime to “enhance the UK’s attractiveness as a location for asset management and for funds in particular”. The UK Qualifying Asset Holding Companies (QAHCs) regime is the first initiative to come out of this review.

Introduced in April 2022, under the Finance Act 2022, the QAHC regime is aimed at increasing the UK’s competitiveness by, broadly, taxing investors as if they had invested directly in the underlying assets.

In essence, QAHCs are a UK investment structuring product, based on several eligibility requirements that allow eligible investors (for example, pension funds, qualifying funds, charities) to ring-fence certain assets (including qualifying shares, loans and overseas property) in order to receive beneficial tax treatment.

Key benefits:

• Exemption from tax on capital gains from disposal of shares and overseas property
• Tax exemption from foreign property business income (including rental income)
• No withholding tax on dividend/interest payments to investors
• No stamp duty on share buy-backs
• Tax deductions on interest paid on debt assets/loans

Who would benefit from setting up a QAHC?

Eligible investors in unlisted equities, non-UK real estate, credit and infrastructure investments who want to co- locate their legal holding structures with their existing operational substance in the UK.

Eligibility

The ownership conditions are the most complex part of the regime with certain qualifying criteria applying:

• It needs to be at least 70% owned by Category A investors
• Its main activity must be investment business
• None of the equity securities it holds can be listed or traded on a recognised public market or exchange
• It needs to be UK tax resident (but not necessarily UK incorporated)
• It is not an REIT (Real Estate Investment Trust)

Monitoring and reporting requirements

The ownership conditions must be monitored on an ongoing basis and HMRC notified if it ceases to satisfy any of the conditions.

The QAHC needs to provide an estimate of market value of the QAHC’s ring-fenced assets at the end of each accounting period.

How ZEDRA can help

Since its launch, the regime has shown high levels of markets interest. Once you have sought advice to confirm that your structure complies with the eligibility criteria, we can help you set up, report on and manage a QAHC for you.

With an average of 20 years’ experience, our UK Corporate team and alternative investment experts provide everything a QAHC structure needs to be set up and operate.

ZEDRA is a global independent fund administrator, offering best in class combinations of people, process and technology working efficiently throughout the fund design process, implementation, and governance. At the heart of our service ethos is the belief that clients are looking for something more than a simple administration service.

Operating from key geographies including the Cayman Islands, Curaçao, Luxembourg, the Channel Islands, the US and Singapore we have the local knowledge you need across the world.

Please note this proposition is for institutional and professional investors only (‘Category A investors’) and is not a product regulated in the UK by the Financial Conduct Authority.