UK: offshore funds, reporting status and the tax return
In UK tax law an Indian scheme is, on our reading, an offshore fund. Whether your exact class is a reporting fund decides how a sale is taxed. Here is how the rules and the return work.
Prepared by Prem Tax and Accounting Corp. Last checked against official sources on November 5, 2026.
On our reading, UK tax rules call an open-ended Indian scheme an "offshore fund". Your tax on a sale depends on whether your exact plan and option is a reporting fund on the list kept by HMRC (the UK tax authority). Our Exact-Class Lookup Slip records that check. Your UK adviser files the UK return; we work alongside. See the countries guide.
- The HMRC list dated November 2, 2026 carries 10 Indian schemes, from 6 fund houses and for named classes only. All other classes are non-reporting.
- A sale of a non-reporting class produces an offshore income gain, taxed as income at 20%, 40% or 45% in England, with no exemption.
- Selling a reporting class held throughout gives a capital gain at 18% or 24% after a GBP 3,000 exemption.
- The Self Assessment return (the UK annual tax return) for 2025-26 is due online by January 31, 2027.
The numbers
| Item | Rule | UK tax year |
|---|---|---|
| Offshore income gain | Income rates 20%, 40%, 45% (basic, higher, additional) in England; no loss offset | 2025-26, 2026-27 |
| Reporting fund gain | 18% or 24%; GBP 3,000 exemption | 2025-26, 2026-27 |
| Payout rates | Dividends 10.75%, 35.75%, 39.35% (GBP 500 allowance); interest 20%, 40%, 45% (2027-28: 22%, 42%, 47% in law; higher rates announced, not law) | 2026-27 |
Rates and the list change often: see key dates.
An invented example
England, 2026-27: a GBP 45,000 salary leaves GBP 5,270 of the basic rate band. A GBP 20,000 gain:
| Class | Working | Tax |
|---|---|---|
| Non-reporting | 20% on 5,270 plus 40% on 14,730 | GBP 6,946.00 |
| Reporting | 18% on 5,270 plus 24% on 11,730, once the GBP 3,000 exemption is deducted | GBP 3,763.80 |
On the return
- SA106: foreign interest boxes 3 and 4, foreign dividends boxes 5 and 6, offshore income gains box 56 (2025-26 form). SA108 covers reporting-fund gains.
- Indian tax is credited up to the lower of the foreign tax and the UK tax on that item. Treaty Articles 11, 12, 14 and 24 apply.
- India is a category 2 territory for offshore penalties, up to 150%. HMRC can often look back 12 years, or 20 if deliberate.
Our checklist
The Exact-Class Lookup Slip:
- Record scheme, plan, option and ISIN for each holding.
- Check the HMRC list by name and ISIN at each sale date.
- Record each payout and the fund's asset mix.
- Record purchase and sale dates and the rate on each.
Common questions
Is my Indian fund a UK reporting fund?
Only if your exact class is on the list. Being listed is a tax status, not a quality signal.
Can an Indian fund sit in an ISA?
Ordinary Indian scheme units are not among the qualifying ISA investments. Indian ETFs are not settled.
Does the 4-year foreign income and gains regime cover Indian funds?
For someone who becomes UK resident after 10 years of non-residence, yes, for dividends, interest and gains. Claim it on the return, by January 31, 2028 for 2025-26; it costs the personal allowance and exemption. See [treaties compared](/indian-mutual-funds/countries/treaties-compared/) and our [Indian CPA page](/indian-cpa/).
Official sources
- HMRC: Approved offshore reporting funds list
- Offshore Funds (Tax) Regulations 2009, regulation 17
- GOV.UK: Capital Gains Tax rates and allowances
- GOV.UK: The 4-year foreign income and gains regime
- GOV.UK: Self Assessment deadlines
- GOV.UK: Tax on foreign income
- GOV.UK: UK-India tax treaties
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