Popular investment vehicles in the UK and offshore jurisdictions

Updated on December 2023

• UK Limited Partnership [Private Fund Limited Partnership]
• UK Unauthorised Exempt Property Unit Trust
• Open-Ended Investment Company (OEIC)
• Authorised Contractual Scheme (ACS)
• Cayman Islands Exempted Limited Partnership
• Jersey/Guernsey Property Unit Trust
• UK Real Estate Investment Trust (UK REIT)
• Qualifying Asset Holding Company (QAHC)

• Limited Partnership

• Unit Trust

• Corporate entity

• ACSs can be established in two legal forms:
  • as authorised co-ownership schemes, and
  • as authorised limited partnership funds

• Limited Partnership

• Unit Trust

• Is an elected tax status
• UK tax resident company (can include other countries if tax resident in UK)
• Share capital and ownership conditions apply

• Is an elected tax status for UK tax resident holding companies (can include other countries if tax resident in UK) 
• Conditions apply including for ownership and must have a qualifying investment strategy

• Tax transparent

• Effectively tax-free at fund level

• OEIC itself is exempt from tax on chargeable gains; may be subject to corporation tax at 25% on income
• Option for election into Property Authorised Investment Fund (PAIF) regime, which, can bring tax advantages making the fund tax efficient, although not transparent
• How investors are treated for tax will depend on residence.

• Tax transparent 
• ACS itself is not a taxable entity for UK tax purposes and is not subject to tax in the UK on income or gains arising on underlying investments
• In some markets, domestic withholding tax exemptions may apply to the ACS

• Transparent 

• Usually tax transparent for income
• Transparency election or exemption election often available

• Tax exempt status for UK property investment business 
• Can have up to 25% of business related to other activities but other activities may be taxable

• Tax exempt status for ringfenced investment business such as for qualifying shares and non-UK land (not UK land)
•  Investors broadly taxed as if they had invested direct

• 5% on direct underlying UK property GAV above GBP 250,000 (with lower rates applied for the portion of GAV below GBP 250,000).

• 0.5%, but in certain circumstances can be nil.

• Will depend on whether the OEIC is a UK UCITS, a non-UCITS retail scheme (NURS), a Qualified Investor Scheme (QIS) or a Long Term Asset Fund (LTAF).
• The former 2 are suitable for mass market retail; the latter for sophisticated or professional clients with LTAFs having some potential for retail exposure (see later entry on LTAF).

• Unlikely if an authorised  co-ownership scheme

• In most circumstances 5% on direct underlying UK property GAV 

• Nil

• 0.5% if UK Company. Will depend on country if non-UK (eg Jersey

• 0.5% if UK Company 
• Will depend on country if non-UK (eg Jersey)

• No

• No

• Yes (but would be unusual)

• No

• Yes

• Yes (but would be unusual)

• Yes. An exemption from listing is available where 70% of direct / indirect ownership is institutional

• No

• Usually closed-ended

• Usually semi open-ended

• Open-ended

• Open-ended

• Usually closed-ended

• Usually closed-ended

• Closed-ended (but buy backs possible)

• Closed-ended (but buy backs possible)

• Manager regulated by FCA in UK and must comply with AIFMD
• Existing limited partnerships can opt-in to the new Private fund regime if they qualify as a “collective investment scheme”

• Manager regulated by FCA in UK and must comply with AIFMD

• Vehicle authorised by FCA in UK and must comply with OEIC Regulations as well as broader FCA rules (such as COLL)
• As an OEIC may be structured as either a UK UCITS or a UK AIF and either of these Directives (as implemented in the UK post-Brexit) and their UK Regulations would therefore also be relevant
• A UK UCITS may not invest in direct real estate - and so real estate exposure is normally achieved by UCITS through investment in REITs and other property investment companies

• Vehicle authorised by FCA in UK and must comply with ACS Regulations as well as broader FCA rules (such as COLL)
• The ACS may be structured as either a UCITS or an AIF and either of these Directives and their Regulations would therefore also be relevant

• Closed ended funds are required to register with the Cayman Islands regulatory authority, the Cayman Islands Monetary Authority
• The regulatory requirements are similar to the Cayman Islands requirements for open-ended "Mutual" funds, including a requirement for an annual audit with Cayman Islands local audit sign-off

• By JFSC in Jersey. Unregulated/Light touch regulated funds available for institutional and large investors. The functionaries of funds may need to be supervised. If marketing in Europe, must consider AIFMD
• By GFSC in Guernsey

• UK AIFMD rules if an AIF with the REIT (internal management) or Manager (external management) regulated by FCA 
• UK or other jurisdiction Prospectus rules if “listed”

• UK AIFMD rules by FCA if an AIF

• Limited to institutional, high net worth or knowledgeable investors

• Only available to UK tax exempt investors, i.e. pension funds and charities

• Will depend on whether the OEIC is a UCITS, a non-UCITS retail scheme, a Qualified Investor Scheme or a Long-Term Asset Fund
• The former 2 are suitable for retail; the latter for sophisticated or professional clients only

• ACSs are available only to certain types certain types of investor, being (1) a professional ACS investor (a professional client for the purposes of MiFID; (2) a large ACS investor (being a person who in exchange for units makes a payment of not less than GBP 1m or contributes property with a value of not less than GBP 1m); and (3) a person who already properly holds units in the ACS
• This restricts the usually wide investment criteria for UCITS and NURSs and must be considered alongside the QIS or LTAF requirements

• None (subject to usual Anti-Money Laundering/Countering Terrorist Financing/Proliferation Financing restrictions including sanctions)

• Depends on regulatory approval obtained

• No, but for unlisted vehicles, there are specific investor requirements

• FCA financial promotion rules
• Tax ownership requirements - investors other than good (eg institutional and diverse ownership investors) not to exceed 30%

• Tax transparent

• Tax efficiency

• Suitable for a large number of investors
• Open-ended – so flexible

• Tax efficiency

• Very flexible
• Proportionate regulation and supervision
• Tax transparent vehicle with no tax Cayman Islands tax imposed at the entity/investor level
• Ideally suited for multiple jurisdictions
• High investor familiarity

• Tax treatment
• High flexibility
• Potential liquidity

• Tax exempt status for UK property investment.
• Can be part of a fund. 
• Can have underlying investment vehicles and joint ventures.

• Tax efficiency including for ring fenced business. Withholding tax exemptions on dividends and interest

• Illiquid and can be subject to transfer tax
• Post-Brexit Non-EU AIF

• Tax exempt investors only

• Investment restrictions (if a UCITS or NURS)
• Much greater flexibility for QIS and LTAF
• Regulated framework (which may be a benefit depending on fund requirements and target investor)

• Investment restrictions (if a UCITS or NURS) and regulated framework (which may be a benefit depending on fund requirements)

• Time zone for European Managers

• Must be managed and controlled outside UK

• Range of REIT conditions which must be met to maintain REIT status

• Entry Specific holding company regime and limitations on activities.

• Pan-European property investment Funds
• UK property joint ventures with exempt taxpayers

• Pooled property for exempt investors

• Retail investment (if a UCITS or NURS)

• UK institutional investment (including local government pension schemes)

• Closed-ended real estate funds
• Private equity funds and credit funds

• UK property investment

• UK property investment.
• Potential “unlisted” use and potentially as part of a fund

• Use as an investment vehicle for qualifying investments
•  Comparable to Luxembourg asset holding companies (AHCs) business