Corporation Tax Act 2009 section 494

Meaning of "qualifying investments"

Section 494 defines which types of investment count as "qualifying investments" for the purposes of the qualifying investments test that applies to open-ended investment companies, unit trust schemes and offshore funds.

• Qualifying investments include money placed at interest, securities (excluding company shares), building society shares, qualifying holdings in other collective investment vehicles, and alternative finance arrangements.
• Derivative contracts count as qualifying investments where their underlying subject matter consists entirely of the above asset types (excluding diminishing shared ownership arrangements) and/or currency.
• Contracts for differences also qualify where their underlying subject matter consists entirely of interest rates, creditworthiness and/or currency.
• Other derivative contracts that do not fall within the above two categories can still qualify if there is a hedging relationship between the contract and a qualifying asset such as money at interest, securities, building society shares or qualifying holdings.