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INTM269150 | Non-residents trading in the UK: through UK investment managers, brokers or Lloyd’s agents: the 20% rule calculation: an example: a transparent collective investment scheme

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. Treat the transparent collective investment scheme as a notional company and the non-resident investors as participators in that notional company.

  2. The notional company fund profits are 225m and each equal partner has a 33.3% profits share of the entire income of the deemed corporate fund. That is 75m each.

  3. Because the transparent fund is deemed a corporate (for the purposes of the 20% rule) only non-resident partner C is treated as a connected party of the investment manager (being 100% owned by it) rather than all of the partners under CTA10/S1122(7) or ITA07/S993(4).

  4. Therefore the investment manager and persons connected to him have income from the fund in excess of the 20% limit of 45m and the 20% rule is not satisfied.

  5. Non-resident partner C’s UK profits would not be covered by the investment manager’s exemption provisions. The 20% rule is satisfied in respect of partners A and B.