On 6 March 2024, at Spring Budget 2024, the Government published the responses to the 2023 consultation on a potential new UK unauthorised contractual scheme fund aimed at professional and institutional investors - the Reserved Investor Fund (RIF), and confirmed that it will proceed with the introduction of the collective investment vehicle. The Government has subsequently published the primary legislation in the Finance Bill 2024 and draft secondary legislation for consultation which provides further details on proposed tax treatment of the RIF.
The RIF is expected to be a suitable vehicle to hold UK real property (particularly commercial property), but the Government has confirmed that the fund will be able to invest in a wide range of asset classes beyond real estate, subject to the RIF being within one of the following three restricted regimes:
- Where at least 75 percent of the value of the RIF’s assets is derived from UK property (so the RIF is ‘UK property rich’ for the purposes of the non-resident capital gains rules);
- Where all investors in the fund are exempt from tax on gains other than by reason of residence (e.g., certain pension funds); or
- Where the fund does not directly invest in UK property, or in UK property rich companies.
These restricted regimes remain as originally proposed in the 2023 consultation and have been introduced to ensure compliance with the UK non-resident capital gains tax rules.