Private investors in the UK are finally to be allowed access to hedge funds through UK retail products, under changes to the regulatory regime proposed by the Treasury and the Financial Services Authority, the Financial Times reports.
In a follow-up to its initial consultation exercise in March 2007, the FSA last week announced “further progress” towards introducing retail-oriented Funds of Alternative Investment Funds that can be authorised in the UK. Crucially, this included a Treasury clarification on how these funds will be taxed.
Under current rules, offshore funds of hedge funds have to pay corporation tax and their investors also pay tax on gains. Now, the proposals move the point of taxation from the fund to the investor.
“If they take away corporation tax from the fund itself, it will be just like investing in any UK authorised Oeic or unit trust,” says Ian Collier of Dexion Capital, a hedge fund manager.