Investment Managers: Disguised Fee Income

For 2015/16 onwards, where an individual provides investment management services for a collective investment scheme through an arrangement involving partnerships, then any sum received for those services (the ‘disguised fee’) will be treated as profits of a trade, unless already charged to income tax. This will have effect in relation to all disguised fees arising on or after 6 April 2015, whenever the arrangement is entered into. Sums will not be caught if they represent a return on investments by the managers or a return which varies by reference to profits on funds. An individual thus charged will be able to claim a consequential adjustment if at any time tax is charged under another tax provision in respect of the same fee. The consequential adjustment cannot exceed the lesser of the two charges.