Investment Manager Exemption (IME)

by Aitch, posted in Overseas Corporate tax issues

The Investment Manager Exemption (IME) is a long-standing HMRC concession that helps attract international investment in the UK. It allows overseas investors to appoint UK-based investment managers without automatically creating a UK tax liability for the investor.

Without the exemption, there is a risk that investment activities carried out by a UK manager on behalf of a non-resident investor could be treated as giving rise to a taxable presence in the UK. The IME helps prevent this outcome where certain conditions are met. 

The Investment Manager Exemption uses qualifying tests to make sure:

  • overseas investors are not charged to UK tax for investment transactions conducted on their behalf; and
  • any fees received by a UK resident investment manager for services performed for the non-resident are fully chargeable to UK tax.

The rules are designed to strike a balance between encouraging international investment into UK-managed funds whilst at the same time ensuring that UK-based investment managers remain fully taxable on their earnings. While the overseas investor may benefit from the IME, the fees earned by the UK investment manager are subject to tax in the normal way.

It is important that fund managers and overseas investors review their arrangements to ensure the qualifying tests are met otherwise this could have significant UK tax implications. 

Source:HM Revenue & Customs | 18-06-2026
author avatar
Aitch
I'm Aitch, the Founder and CEO of CIGMA Accounting Ltd. As a Chartered Management Accountant and as a CIMA member, I've spent more than 16 years helping businesses, entrepreneurs, landlords, and individuals with tax planning, accounting, and HMRC compliance. As a chartered accountant in London, I'm passionate about making complex tax matters easier to understand and helping clients make confident financial decisions. Over the years, I've advised start-ups, SMEs, established companies, and high-net-worth individuals across a wide range of tax and accounting matters. My expertise includes Corporation Tax, Self-Assessment, Capital Gains Tax, Inheritance Tax planning, R&D tax relief, capital allowances, international tax, and resolving complex HMRC compliance issues. Whether clients need a business accountant, tax accountant, or strategic tax advisor, my focus is always on delivering practical advice that creates long-term value. One of my specialist areas is Making Tax Digital (MTD). I've worked extensively with businesses preparing HMRC's digital reporting requirements, helping them move to cloud accounting, improve financial processes, and adopt technology that makes compliance more efficient. I regularly speak at Making Tax Digital roadshows, industry events, and educational sessions in collaboration with Zoho Books, sharing practical insights into digital accounting, tax legislation, and the future of the profession. Many business owners looking for the best accounting firm in London are not simply searching for an accountant they're looking for trusted advice, responsive support, and long-term value. That's the approach I've taken in building CIGMA Accounting. My team and I work closely with businesses across London and the UK, providing accounting services, tax advisory, bookkeeping, payroll, VAT, company accounts, and strategic tax planning tailored to each client's goals. Through this website, I share practical guidance on UK taxation, Making Tax Digital, HMRC updates, Corporation Tax, Self-Assessment, and business finance. My aim is to provide reliable, straightforward information that helps business owners understand changing regulations, reduce compliance risks, and make informed financial decisions with confidence.
See Full Bio