Income equalisation

Certain BlackRock funds operate Income Equalisation arrangements with a view to ensuring that the level of income accrued within a Fund and attributable to each Share (or Unit) is not affected by the issue, conversion, or redemption of Shares during a distribution or accumulation period. These arrangements may have an impact on the tax position of UK resident investors.


Where an Investor buys Shares during a distribution or accumulation period, the price at which those Shares are bought may include an amount of income earned since the last distribution or accumulation by the fund - ‘Income Equalisation’. On the occasion of the first distribution or accumulation of income following that purchase, that Income Equalisation will normally be regarded as a non-taxable capital return for UK tax purposes.

Accordingly, investors who are deemed to be in receipt of reportable income or in receipt of distributions for UK tax purposes are allowed to adjust their taxable income for their share of any Income Equalisation. Investors should note, however, that where such an adjustment is made, there may be a corresponding adjustment to the base cost of their Shares on any eventual disposal.

The equalisation rates provided allow investors to calculate these adjustments for each purchase that they make. In all cases, the equalisation rate to use will be the rate calculated on the dealing day as defined in the prospectus of the Fund or where that is not available, the most recent equalisation rate available prior to that date. Distribution rates and the price per Share are included on the distribution statements and contract notes issued to investors.

Glossary of terms

  • The period from one distribution record date to the next. Typically, a distribution period is annual, but the period may be shorter i.e. it may be a quarter or a month in duration.

  • A fund that does not distribute its profits will accumulate those profits on periodic basis – the process whereby the income property of the fund is added to the capital property of the fund. Typically, an accumulation period is the annual accounting period of the fund for UK reporting purposes.

  • The period for which the fund provides a report of taxable income to investors. Generally, this will correspond to the period for which financial statements for the fund are drawn up.

  • The amount of the total distribution paid per Share in respect of a distribution period. This will be the cash per Share received by each investor.

  • The amount of income per Share earned at any particular point during the distribution or accumulation period.

  • A number of BlackRock funds have obtained UKRF (UKDS under the previous UK tax regime) from HMRC.

    UK taxable investors disposing of interests in a fund that has obtained UKRF or UKDS for their entire period of ownership should be subject to capital gains tax on the disposal proceeds.

    UK taxable investors disposing of interests in a fund that has not obtained UKRF or UKDS during the entire period of ownership should be subject to income tax on the disposal proceeds.

  • Those funds that have entered the UKRF regime may have to report taxable income to investors that is greater than the total distributions paid.

    The excess of the amount of reportable income per share in the fund for the reporting period over the amount actually distributed to participants per share in the fund in respect of the reporting period.

  • Excess Reportable Income is calculated by multiplying the Excess Reportable Income Rate by the number of shares held by the Investor on the last day of the reporting period.

    For UK taxable investors, the Excess Reportable Income is treated in the same way as a distribution and should be included as such on a UK tax return. The Excess Reportable Income should be treated as a distribution that is received six months after the end of the accounting period.

 


Equalisation ratios

BlackRock Specialist Strategies Fund
2017 2017
2018 2018
2019 2019
2020 2020
BlackRock Funds I ICAV
2020 2020
BlackRock Liability Solutions Funds III (Dublin)
2020 2020