Popular investment vehicles in the UK and offshore jurisdictions

Updated on December 2023

Investment vehicle

  • 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)

1. Form

UK Limited Partnership [Private Fund Limited Partnership]
  • Limited Partnership
UK Unauthorised Exempt Property Unit Trust
  • Unit Trust
Open-Ended Investment Company (OEIC)
  • Corporate entity
Authorised Contractual Scheme (ACS)
  • ACSs can be established in two legal forms:
    • as authorised co-ownership schemes, and
    • as authorised limited partnership funds
Cayman Islands Exempted Limited Partnership
  • Limited Partnership
Jersey/Guernsey Property Unit Trust
  • Unit Trust
UK Real Estate Investment Trust (UK REIT)
  • Is an elected tax status
  •  UK tax resident company (can include other countries if tax resident in UK)
  • Share capital and ownership conditions apply
Qualifying Asset Holding Company (QAHC)
  • 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

2. Tax Treatment

UK Limited Partnership [Private Fund Limited Partnership]
  • Tax transparent
UK Unauthorised Exempt Property Unit Trust
  • Effectively tax-free at fund level
Open-Ended Investment Company (OEIC)
  • 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.
Authorised Contractual Scheme (ACS)
  • 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
Cayman Islands Exempted Limited Partnership
  • Transparent 
Jersey/Guernsey Property Unit Trust
  • Usually tax transparent for income
  • Transparency election or exemption election often available
UK Real Estate Investment Trust (UK REIT)
  • 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
Qualifying Asset Holding Company (QAHC)
  • 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

3. Transfer Tax

UK Limited Partnership [Private Fund Limited Partnership]
  • In most circumstances 5% on direct underlying UK property GAV 
UK Unauthorised Exempt Property Unit Trust
  • 0.5%
Open-Ended Investment Company (OEIC)
  • Will depend on asset class OEIC holds
Authorised Contractual Scheme (ACS)
  • Unlikely if an authorised  co-ownership scheme
Cayman Islands Exempted Limited Partnership
  • In most circumstances 5% on direct underlying UK property GAV 
Jersey/Guernsey Property Unit Trust
  • Nil
UK Real Estate Investment Trust (UK REIT)
  • 0.5% if UK Company Will depend on country if non-UK (eg Jersey
Qualifying Asset Holding Company (QAHC)
  • 0.5% if UK Company Will depend on country if non-UK (eg Jersey)

4. Listable

UK Limited Partnership [Private Fund Limited Partnership]
  • No
UK Unauthorised Exempt Property Unit Trust
  • No
Open-Ended Investment Company (OEIC)
  • Yes (but would be unusual)
Authorised Contractual Scheme (ACS)
  • No
Cayman Islands Exempted Limited Partnership
  • Yes
Jersey/Guernsey Property Unit Trust
  • Yes (but would be unusual)
UK Real Estate Investment Trust (UK REIT)
  • Yes. An exemption from listing is available where 70% of direct / indirect ownership is institutional
Qualifying Asset Holding Company (QAHC)
  • No

5. Open- or closed-ended

UK Limited Partnership [Private Fund Limited Partnership]
  • Usually closed-ended
UK Unauthorised Exempt Property Unit Trust
  • Usually semi open-ended
Open-Ended Investment Company (OEIC)
  • Open-ended
Authorised Contractual Scheme (ACS)
  • Open-ended
Cayman Islands Exempted Limited Partnership
  • Usually closed-ended
Jersey/Guernsey Property Unit Trust
  • Usually closed-ended
UK Real Estate Investment Trust (UK REIT)
  • Closed-ended (but buy backs possible)
Qualifying Asset Holding Company (QAHC)
  • Closed-ended (but buy backs possible)

6. Regulatory Supervision

UK Limited Partnership [Private Fund Limited Partnership]
  • 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”
UK Unauthorised Exempt Property Unit Trust
  • Manager regulated by FCA in UK and must comply with AIFMD
Open-Ended Investment Company (OEIC)
  • 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
Authorised Contractual Scheme (ACS)
  • 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
Cayman Islands Exempted Limited Partnership
  • 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
Jersey/Guernsey Property Unit Trust
  • 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 Real Estate Investment Trust (UK REIT)
  • 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”
Qualifying Asset Holding Company (QAHC)
  • UK AIFMD rules by FCA if an AIF

7. Investor Restrictions

UK Limited Partnership [Private Fund Limited Partnership]
  • Limited to institutional, high net worth or knowledgeable investors
UK Unauthorised Exempt Property Unit Trust
  • Only available to UK tax exempt investors, i.e. pension funds and charities
Open-Ended Investment Company (OEIC)
  • 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
Authorised Contractual Scheme (ACS)
  • 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
Cayman Islands Exempted Limited Partnership
  • None (subject to usual Anti-Money Laundering/Countering Terrorist Financing/Proliferation Financing restrictions including sanctions)
Jersey/Guernsey Property Unit Trust
  • Depends on regulatory approval obtained
UK Real Estate Investment Trust (UK REIT)
  • No, but for unlisted vehicles, there are specific investor requirements
Qualifying Asset Holding Company (QAHC)
  • FCA financial promotion rules
  • Tax ownership requirements - investors other than good (eg institutional and diverse ownership investors) not to exceed 30%

8. Best Feature

UK Limited Partnership [Private Fund Limited Partnership]
  • Tax transparent
UK Unauthorised Exempt Property Unit Trust
  • Tax efficiency

Open-Ended Investment Company (OEIC)

  • Suitable for a large number of investors
  • Open-ended – so flexible
Authorised Contractual Scheme (ACS)
  • Tax efficiency
Cayman Islands Exempted Limited Partnership
  • 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
Jersey/Guernsey Property Unit Trust
  • Tax treatment
  • High flexibility
  • Potential liquidity
UK Real Estate Investment Trust (UK REIT)
  • Tax exempt status for UK property investment
  • Can be part of a fund Can have investment vehicles and joint ventures
Qualifying Asset Holding Company (QAHC)
  • Tax efficiency including for ring fenced business. Withholding tax exemptions on dividends and interest

9. Worst Feature

UK Limited Partnership [Private Fund Limited Partnership]
  • Illiquid and can be subject to transfer tax
  • Post-Brexit Non-EU AIF
UK Unauthorised Exempt Property Unit Trust
  • Tax exempt investors only
Open-Ended Investment Company (OEIC)
  • 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)
Authorised Contractual Scheme (ACS)
  • Investment restrictions (if a UCITS or NURS) and regulated framework (which may be a benefit depending on fund requirements)
Cayman Islands Exempted Limited Partnership
  • Time zone for European Managers
Jersey/Guernsey Property Unit Trust
  • Must be managed and controlled outside UK
UK Real Estate Investment Trust (UK REIT)
  • Range of REIT conditions which must be met to maintain REIT status
Qualifying Asset Holding Company (QAHC)
  • Entry Specific holding company regime and limitations on activities.

10. Best Used For

UK Limited Partnership [Private Fund Limited Partnership]
  • Pan-European property investment Funds
  • UK property joint ventures with exempt taxpayers
UK Unauthorised Exempt Property Unit Trust
  • Pooled property for exempt investors
Open-Ended Investment Company (OEIC)
  • Retail investment (if a UCITS or NURS)
Authorised Contractual Scheme (ACS)
  • UK institutional investment (including local government pension schemes)
Cayman Islands Exempted Limited Partnership
  • Closed-ended real estate funds
  • Private equity funds and credit funds
Jersey/Guernsey Property Unit Trust
  • UK property investment
UK Real Estate Investment Trust (UK REIT)
  • UK property investment.
  • Potential “unlisted” use and potentially as part of a fund
Qualifying Asset Holding Company (QAHC)
  • Use as an investment vehicle for qualifying investments
  •  Comparable to Luxembourg asset holding companies (AHCs) business
Portrait ofChristopher Luck
Christopher Luck
Partner
London
Portrait ofAmanda Howard
Amanda Howard
Partner
London