UK Qualifying Asset Holding Company (QHAC)

The rules for ‘qualifying asset holding companies’ (QAHCs) were introduced in 2022 to create an alternative UK regime for holding companies, with beneficial tax treatment for qualifying entities and their investors. The QHAC was intended to enhance the UK’s competitiveness as a location for asset management and for investment funds.

The regime is designed for asset holding companies (AHCs) that meet certain criteria and are used in a range of collective investment structures to hold investment assets, as well as the investment funds, institutions, individuals and other entities that invest in those structures.

The aim is to recognise circumstances where intermediate holding companies are used to facilitate the flow of capital, income and gains between investors and underlying investments, so that investors are taxed broadly as if they invested in the underlying assets and the intermediate holding companies pay no more tax than is proportionate to the activities they perform.

A QAHC must be at least 70% owned by diversely owned funds, or certain institutional investors, and must mainly carry out investment activity, with no more than insubstantial ancillary trading permitted.

The company’s investment strategy must not involve the acquisition of listed equity securities, outside of a public-to-private transaction, and the UK AHC must not be a UK Real Estate Investment Trust (REIT) or listed or traded on a recognised stock exchange or similar.