Restricted Fund meaning

In this issue: Companies and corporation tax Stamp taxes VAT Individuals and income tax Taxes management and litigation Employment taxes Budget and Finance Bills Daily and weekly news alerts New and updated content Dates for your diary Trackers Useful information Companies and corporation tax Court of Appeal decides interest on intra-group loans not restricted under transfer pricing rules but debits disallowed under unallowable purpose rule (BlackRock Holdco 5, LLC v HMRC) BlackRock Holdco 5, LLC v HMRC [2024] EWCA Civ 330 considers whether, for UK tax purposes, interest on intra‑group borrowing put in place to help fund a commercial acquisition is deductible. Two principal points were before the Court of Appeal: the transfer pricing analysis and the loan relationships unallowable purpose question. On the transfer pricing limb, the Court of Appeal allowed the taxpayer’s appeal. As a result, deductions for interest on the intra‑group loans were not curtailed by the transfer...

The Work and Pensions Committee (WPC) The WPC has concluded that The Pensions Regulator’s (TPR) primary objective of protecting the Pensions Protection Fund (PPF) is now redundant, as the lifeboat fund holds a £12bn funding surplus. It says TPR should pivot to safeguarding both past and future benefits for members, helping ensure open schemes are not compelled to shut to new accruals. This was a central recommendation in a report on DB pensions, arising from a comprehensive inquiry launched in March 2023. Stephen Timms, who chairs the committee, said the PPF’s markedly stronger financial position offers welcome flexibility for government to prevent open schemes being constrained by excessively cautious regulatory limits, a development the committee applauds. TPR’s statutory objectives include reducing the likelihood that the PPF must pay compensation to members of a retirement scheme...

Unrestricted funds—general use of assets The overarching rule for applying a charity’s assets is that, unless a specific restriction applies, both income and capital should be used to further the charity’s purposes and to deliver public benefit. Even where funds are classed as unrestricted, there may still be constraints on spending income and capital on the charity’s assets, typically set out in the charity’s constitution. Constitutions may impose conditions on distributing income, on carrying income forward for use in later years, or on accumulating it and converting it into capital. Limits on distributing capital may likewise be specified in the constitution. Where the constitution is silent, the usual expectation is that trustees will, as a minimum, distribute income and have discretion to distribute capital. Funds that are not unrestricted generally fall into three main types: designated funds (which are truly a subset of unrestricted funds) restricted funds (which, generally speaking, include the misnamed category of expendable endowments) endowments (sometimes also referred to as permanent,...

FORTHCOMING CHANGE relating to the tax treatment of carried interest: After a call for evidence on the tax treatment of carried interest run over summer 2024, the Autumn Budget 2024 confirmed the government’s plan to introduce an updated carried interest tax regime from 6 April 2026, positioned within the income tax system with bespoke provisions to reflect the distinctive nature of this remuneration. A consultation then examined potential new eligibility conditions for entry to the regime, with the government’s response issued in June 2025. Draft legislation for the regime was released on 21 July 2025 for inclusion in Finance Bill 2026. The rules will apply to carried interest arising on or after 6 April 2026. These measures were affirmed at the 26 November 2025 Budget, which also noted amendments to the draft to incorporate stakeholder feedback. Pending commencement of the new framework, the capital gains tax rates applicable to carried interest were lifted to 32% with effect from 6 April 2025. For further information on this carried interest tax...

Scope of this Practice Note The Financial Conduct Authority’s (FCA) chapter 4 of the Conduct of Business sourcebook (COBS 4) broadly applies to firms when they communicate with a client or prospective client while undertaking designated investment business, MiFID business, equivalent third country business or optional exemption business, and when they communicate or approve a financial promotion relating to investment business. This Practice Note reviews COBS 4.12A and COBS 4.12B, which set out the rules on promoting restricted mass market investments (RMMIs) and non-mass market investments (NMMIs). It also addresses the provisions in COBS 4.13 concerning the marketing of undertakings for collective investment in transferable securities (UCITS). This Practice Note forms part of a wider series examining the COBS 4 rules and should be read alongside the following Practice Notes: Introduction to the FCA COBS 4 rules Application of the FCA’s COBS 4 rules FCA COBS 4 rules—Putting together financial promotions FCA COBS 4 rules—Form and content of promotions COBS...