Income tables
United Kingdom Taxation
The below statements on taxation are intended to be a general summary of the UK tax treatment that may be applicable to UK Investors in the following Funds:
- Schroder Alternative Solutions (AS)
- Schroder Capital Investments Fund (CIF)
- Schroder Global Alternative Investor Access (GAIA)
- Schroder International Selection Fund (ISF)
- Schroder Special Situations Fund (SSF)
The statements relate only to Investors who are UK resident or ordinarily resident for UK tax purposes, who are the beneficial owners of their Shares and who hold their Shares as an investment (as opposed to on trading account). The statements are based on current law and the published practice of Her Majesty's Revenue & Customs ("HMRC").
Distributions
Distributions paid by Funds that hold more than 60% of their assets in interest-bearing, or economically similar, form at any time in an accounting period are treated as a payment of annual interest for UK resident individual Investors. Accordingly, such distributions will be subject to tax at the rates applying to interest (currently 10%, 20%, 40% and 50%).
Where a Fund does not hold more than 60% of its assets in interest-bearing, or economically similar, form at any time in an accounting period, distributions will be treated as dividends. Accordingly, such distributions will be subject to tax at the rates applying to dividends (currently 10%, 32.5% and 42.5%). A non-refundable tax credit equivalent to 10% of the gross dividend can be offset against the associated tax liability.
UK resident corporate Investors may benefit from one of the exemptions from UK corporation tax on dividends received from the Funds. Where the Fund in question holds more than 60% of its assets in interest-bearing, or economically similar form at any time in an accounting period, then any distribution will be treated as interest in the hands of a corporate Investor.
Offshore Funds Regime
All Share Classes of the Funds meet the definition of an offshore fund as laid out in relevant UK tax legislation. Accordingly, UK Investors should be aware of the following.
Reporting Fund Status
The new UK Offshore Funds legislation contained in the Taxation (International and other Provisions) Act 2010 and the Offshore Funds (Tax) Regulations (SI 2009/3001) (the "new regime") provides that, unless a Share Class is approved by HM Revenue & Customs as a "reporting fund", any gains arising to Shareholders resident or ordinarily resident in the United Kingdom on a sale, redemption or other disposal of Shares (including a deemed disposal on death) will be taxed as offshore income rather than capital gains. The new regime replaces a similar regime under which Share Classes obtained certification as "distributing funds" with a view to delivering capital gains treatment.
It is currently our intention that all Share Classes will seek approval as reporting funds and that these Share Classes will maintain their qualification as reporting funds in order for UK Investors to enjoy a more advantageous tax treatment. This means that on disposal of their investment UK individual Investors will generally be subject to capital gains tax at 18/28 per cent rather than income tax at 20/40/50 per cent.
A UK corporate Investor will be subject to corporation tax on chargeable gains at the mainstream rate of corporation tax (26 per cent for 2011/12).
A full list of reporting Share Classes is available from the Fund's Management Company on request.
Lists of certification dates both for UK Distributing Status and Reporting Fund Status are published on the HMRC website at www.hmrc.gov.uk/collective/cis-centre.htm#of
Provided reporting fund status is obtained, any capital gain on disposal of the Shares described above during a reporting period will not be reclassified as an offshore income gain under the new regime, subject to the Share Class having been either certified as "distributing" or approved as "reporting" throughout the Shareholder's holding period. Holders of Shares that are not certified as distributing Share Classes for tax purposes under the previous regime, but that become reporting funds under the new regime, should note that an election to HMRC will be necessary to secure capital gains tax treatment for future disposals.
The Directors reserve the right to change their minds without prior notice as to the range of Share Classes for which reporting fund status will be sought.
Reports made to all investors
In accordance with the new UK Offshore Funds legislation, reportable income attributable to each Fund Share will be published on the Schroders website within six months of the end of the reporting period. It is the Investors' responsibility to calculate and report their respective total reportable income to HMRC based on the number of Shares held at the end of the reporting period.
In addition to reportable income attributable to each Fund Share the report will include information on amounts distributed per Share and the dates of distributions in respect of the reporting period. Shareholders with particular needs may request their report be provided in paper form, however we reserve the right to make a charge for this service.
To the extent that reportable income exceeds distributed income, it will potentially be taxable as a further distribution in the hands of a UK resident Investor. This deemed distribution will arise on the Fund's "distribution date". This will be 6 months following the last day of the reporting period.
The daily equalisation amount per Fund Share will also be published.
Schroders operates a full equalisation policy for all the Funds, with the exception of Schroder Capital Investments Fund, with the objective that the income yield of a reporting Fund Share Class is unaffected either by incoming or outgoing investors. The equalisation amount corresponds to the income earned by the reporting Fund Share Class up to a particular date in the reporting period. Investors can use the equalisation figures published on the Schroders website to determine their tax liability.
Further details and figures can be found on the following Schroders website www.schroders.com/equalisation.
Please consult www.hmrc.gov.uk or your tax adviser for further details.
For the income table for each fund range, refer to the link below:
- Schroder Alternative Solutions
Reporting period ended 30 September 2011 - Schroder GAIA
Reporting period ended 30 September 2011
Reporting period ended 30 September 2010 - Schroder Capital Investments Fund
Reporting period ended 31 December 2010 - Schroder Offshore Cash Funds