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The NRCGT rules charging gains on disposals by non-UK residents of direct or indirect interests in UK land are modified in the case of collective investment vehicles (CIVs) and their investors so as to limit the potential for multiple layers of UK taxation and any unintended consequences of the rules for exempt investors in offshore pension funds and similar vehicles. For an overview of the NRCGT rules generally see C2.1139 and for an overview of the CIV rules see C2.1160. This article discusses the election which can be made by offshore CIVs that are UK property rich and are transparent for income tax purposes to also be treated as tax transparent for capital gains purposes. The election will therefore be applicable to entities such as 'Baker' unit trusts, Luxembourg or French fonds commun du placement (FCPs) and Irish common contractual funds (CCFs)¹.

The election is not relevant in the case of partnerships that are CIVs, who are already transparent for both income and gains².

The effect of the transparency election