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INTM269140 | Non-residents trading in the UK: through UK investment managers, brokers or Lloyd’s agents: the 20% rule calculation: an example: an opaque fund

From HM Revenue & Customs · International Manual

This page is for chargeable periods beginning before 1 January 2026. For chargeable periods beginning on or after 1 January 2026 the 20% test has been removed from the legislation.

  1. Consider each non-resident separately. Non-resident C has fund income of 75m.

  2. 20% of fund income of 225m is 45m

  3. The investment manager’s income, together with that of parties connected to him (non-resident C), totals 75m. (The 75m fees received by the investment manager are a cost before the fund income is calculated, rather than income, and are not taken into account for this purpose.) This exceeds the 20% limit of 45m so the exemption is not available in respect of the transactions that the investment manager carries out for non-resident C.

  4. The 20% rule is not broken in respect of non-residents A and B as they are not connected to the investment manager.