Prospectus Of Clerical Medical Open Ended Investment Company ...

TAXATION
The information given under this heading is for general guidance only and does not
constitute legal or tax advice. Prospective investors should consult their own professional
advisers as to the implications of subscribing for, purchasing, holding, Switching or disposing
of Shares under the laws of the jurisdiction in which they are resident for tax purposes.
The Company
Each Fund is exempt from UK tax on dividends received from UK companies and, with effect
from 1 July 2009, this exemption has been extended to dividends received from overseas
companies (subject to certain conditions). Each Fund can choose to elect to tax particular
overseas dividends and, where it makes such an election, these dividends will be included in
the taxable income of the Fund. Most other sources of income (e.g. interest income) will also
constitute taxable income of each Fund. Each Fund will be subject to corporation tax at 20%
on its taxable income after deducting allowable expenses and interest distributions (see
below) and subject to relief for any foreign tax suffered in respect of that taxable income.
Gains and losses on creditor relationships (e.g. loan stocks, corporate bonds, gilts) will not
be taxable if they are included in the accounts as ‘net gains/losses on investments’ or ‘other
gains/losses’.
Capital gains realised on the disposal of the investments held by any of the Funds are not
subject to UK corporation tax. However, in certain circumstances, income may be deemed to
arise for tax purposes in respect of certain investments (e.g. interests in limited partnerships
and material interests in offshore funds) notwithstanding that the income concerned has not
been received as such by the Fund.
The Funds may be subject to overseas tax and the extent of this tax charge will be
dependent on the countries the fund invests into, the types of investments held and any
double tax treaties in place between the UK and overseas territory. These local tax laws are
subject to change.
Stamp Duty/SDRT ∗
Stamp duty or SDRT may be payable by the Company on the purchase of investments or in
respect of any transfers of assets between Funds.
Shareholders
Allocations of income to Shareholders are treated as taxable distributions regardless of
whether the income is retained within the Fund or actually paid to Shareholders.
Income – dividend distributions
Any dividend distribution made by a Fund will be treated as if it were a dividend from a UK
company. No deduction of UK income tax is made from a dividend distribution, but the
dividend distribution will come with an associated tax credit of one-ninth of the amount of the
dividend. This tax credit will satisfy the tax liability of UK resident individual Shareholders
subject to basic rate income tax.
Individual Shareholders who are liable to income tax at the higher rate or additional rate may
need to pay more tax and should consult their own professional tax advisers or tax office.
∗ As of 30 March 2014, the SDRT charge on surrenders of interests in UK unit trusts and open-ended investment companies in
Part 2 of Schedule 19 to the Finance Act 1999 has been abolished. There is a principal charge that applies for in
specie redemptions when non-pro rated.
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