Income Tax Act 2007 section 835P

Treatment of transactions where 20% rule not met

Section 835P explains how investment transaction income is treated when all the independent investment manager conditions are satisfied except for the 20% rule, ensuring that only the tainted portion of income loses its exempt status.

• This section applies where an investment transaction meets all the independent investment manager conditions except the 20% rule
• The legislation treats the 20% rule as satisfied for the portion of transaction income that is not tainted by the investment manager's beneficial entitlement
• Income is only excluded from relief where it is both relevant disregarded income of the non-UK resident and subject to a beneficial entitlement of the investment manager or a connected person
• The practical effect is that only the specific income linked to the manager's excessive participation is brought into charge, rather than disqualifying the entire transaction