Income Tax Act 2007 section 835O

Meaning of "qualifying period", "relevant disregarded income" and "beneficial entitlement"

Section 835O defines three key terms — "qualifying period", "relevant disregarded income" and "beneficial entitlement" — used in the rules that determine whether an investment manager's share of profits from managing a non-UK resident's investments triggers the 20% rule.

• A "qualifying period" is either the single tax year in which the relevant transaction income is chargeable to tax, or a period of up to five years comprising two or more consecutive tax years that includes that year.
• "Relevant disregarded income" is the non-UK resident's total income for the tax years in the qualifying period that arises from investment transactions carried out by the investment manager on the non-UK resident's behalf, where the independent investment manager conditions are met (but ignoring the 20% rule itself).
• A person has a "beneficial entitlement" to relevant disregarded income if they hold, or may acquire, an entitlement attributable to that income through an interest in the property representing the income or through an interest or rights in the non-UK resident entity.
• The interest in property counts even if it does not carry a right to an immediate share of profits, and an interest or other rights in the non-UK resident entity itself also counts.