Part 6Relationships treated as loan relationships etc

Chapter 3OEICs, unit trusts and offshore funds

The qualifying investments test

494Meaning of “qualifying investments”

1

In section 493 “qualifying investments”, in relation to an open-ended investment company, a unit trust scheme or an offshore fund, means investments of the company, scheme or fund of any of the following descriptions—

a

money placed at interest,

b

securities,

c

shares in a building society,

d

qualifying holdings in an open-ended investment company, a unit trust scheme or an offshore fund,

e

alternative finance arrangements,

f

derivative contracts whose underlying subject matter consists wholly of any one or more of—

i

the matters referred to in paragraphs (a) to (e) (other than diminishing shared ownership arrangements), and

ii

currency,

g

contracts for differences whose underlying subject matter consists wholly of any one or more of—

i

interest rates,

ii

creditworthiness, and

iii

currency, and

h

derivative contracts not within paragraph (f) or (g) where there is a hedging relationship between the contract and an asset within paragraphs (a) to (d).

2

In this section—

  • “contract for differences” has the same meaning as in Part 7 (derivative contracts) (see section 582),

  • “diminishing shared ownership arrangements” means arrangements to which section 504 applies,

  • “hedging relationship” has the meaning given by section 496,

  • “qualifying holding” has the meaning given by section 495(1),

  • “security” does not include shares in a company, and

  • “underlying subject matter” has the same meaning as in Part 7 (derivative contracts) (see section 583).