Budget move to open up more funds to UK investors

LONDON (Reuters) - UK investors will have access to a much greater range of investment funds after the Treasury said on Wednesday it plans to extend favourable tax treatment to more offshore funds.

The Treasury said that in order to qualify for capital gains tax treatment rather than more onerous income tax treatment, offshore funds -- funds resident outside the UK -- would no longer have to distribute at least 85 percent of their income to investors but could instead simply "report" income.

The move is beneficial because many offshore funds in other jurisdictions do not distribute this much income but instead roll up income for future distribution. This means the range of offshore funds in which it would be tax-advantageous for a UK investor to invest in is currently relatively small.

"From an investor's point of view it gives them a wider range of funds to invest in," said Julie Patterson, director of authorised funds and tax at the Investment Management Association.

"For the funds industry, they can begin to rationalise their fund ranges (by not needing to have different funds for different types of investor)."

(Reporting by Laurence Fletcher; Editing by David Cowell)