Publish Date

Mar 16, 2023

London Asset Manager Briefing Note – Volume 14

Asset Managers Briefing Note

The UK Spring Budget 2023 particularly focused on areas relating to the workforce and measures intended to reduce inflation. We have set out a breakdown of the measures particularly relevant for asset managers:


  • The government is introducing a new elective accruals basis of taxation for carried interest. Applicable from 6 April 2022, this will allow UK resident investment managers to accelerate their tax liabilities in order to align their timing with the position in other jurisdictions where they may obtain double taxation relief. This is positive news for taxpayers, where there are timing differences in another jurisdiction i.e. the US – further assessment of how to make a claim in the other jurisdiction should still be done to obtain double taxation relief.
  • There is much welcomed news in relation to pensions. The annual allowance for pension contributions is expected to be increased to £60,000, from £40,000.  This means that more contributions can be made per annum, before facing a potential charge to tax. The lifetime pensions allowance, previously set at £1.07m, will be removed, and is expected to be abolished in a future Finance Bill, meaning that the total amount of money built up in pension scheme would not face any further tax charges.
  • The government is introducing changes to the self-assessment tax return forms requiring amounts in respect of crypto-assets to be identified separately. The changes will be introduced on the forms for tax year 2024/25.


  • The government will continue to make changes to the new Qualifying Asset Holding Company (“QAHC”) tax regime, which became available from April 2022, so that the regime is more widely available to investment fund structures which fall within its intended scope and the rules better achieve their intended effect. This will further enhance the attractiveness of the UK as a location for establishing asset holding companies by allowing more relevant companies to make use of the regime. Changes will variously take effect from Royal Assent of the Spring Finance Bill 2023, 20 July 2022 and 15 March 2023, or are deemed to have always had effect. These changes we expect, should relate to the eligibility requirements for an entity to be a QAHC, in particular, the ownership condition, and multi-fund structures.
  • The government will make changes to the Genuine Diversity of Ownership (“GDO”) conditions in the QAHC, REIT and Non-Resident Capital Gains (“NRCG”) rules. The GDO conditions are broadly specific requirements which ensure that a fund is widely available, marketed as such, and not limited to specific investors, and where these are met, tax benefits could apply. We have been involved in the review of the GDO conditions, and we were expecting changes to be made, particularly to fund structures with multiple pooling vehicles. The changes, apparently will take effect from Royal Assent of the Spring Finance Bill 2023.
  • Amendments will be made to the Real Estate Investment Trust (“REIT”) regime to enhance its competitiveness. In addition to changes announced in the Edinburgh Reforms launched on 9 December 2022, which will address unnecessary barriers to entry and ensure the rules are operating as intended, the government will also reduce administrative burdens for certain partnerships investing in REITs. The changes will variously apply from 1 April 2023 and Royal Assent of the Spring Finance Bill 2023.


  • It has been confirmed that the rate increase for UK Corporation Tax (“CT”) – 19% to 25% from April 2023 – will go ahead, as expected.
  • The government will be making a number of modifications in connection with the Corporate Interest Restriction rules. In most cases, these will take effect for periods of account commencing on or after 1 April 2023.
  • Two major capital allowances have been introduced: (1) a re-vamped “100% First Year Allowance”, which will allow a business to write-off the full cost of qualifying plant & machinery in the year of investment, and (2) full expensing, which lets a business deduct 100% of the cost of certain plant and machinery from their profits before tax. Both are effective from 1 April 2023 to 31 March 2026.
  • Further support will be offered for R&D intensive Small and Medium size Enterprises (“SMEs”). Eligible companies will receive £27 from HMRC for every £100 of R&D investment.  Also, the previously announced restriction on some overseas expenditure will now come into effect from 1 April 2024 instead of 1 April 2023. This will allow the government to consider the interaction between this restriction and the design of a potential merged R&D relief.
  • The government is launching a refocused Investment Zones programme.  Investment Zones will have access to a single 5 year tax offer matching that in Freeports, consisting of enhanced rates of Capital Allowance, Structures  and Buildings Allowance, and relief from Stamp Duty Land Tax, Business Rates  and Employer National Insurance Contributions. Alongside this, Investment  Zones will have access to flexible grant funding to support skills and incentivise apprenticeships, provide specialist business support and improve local infrastructure, dependent on local requirements.

4.    VAT

  • There has been consultation regarding the proposed reform of the VAT rules on fund management, in order to improve legal clarity and certainty, which recently closed. In particular, the question of whether a new principles-based definition of a Special Investment Fund (“SIF”) should be added to the VAT Act, was raised. Given the uncertainty on the scope of the UK’s SIF exemption currently, the introduction of clear legislation to codify the scope of the SIF exemption is welcome. We will provide a further update once the government’s response to the consultation is published in the coming months.
  • In general, the government will continue working with industry stakeholders to consider possible reforms to simplify the VAT treatment of financial services, with the aim of reducing inconsistencies and providing businesses with greater clarity and certainty. It is yet to be seen whether a consultation into VAT on fund management fees would be re-opened, we consider this unlikely following the developments last year.

If you have any particular queries regarding the above or would like to speak about your structures more generally, please do not hesitate to contact Daniel ParryJordan BrownOrion GanaseShirley Ly or your regular contact at A&M.