Hipgnosis Songs Fund has received approval for its application to become a UK resident investment trust company.

From today (1 April), Hipgnosis will cease to be a Guernsey tax exempt vehicle and will instead be "treated as being resident in the UK for tax purposes".

In a statement, Hipgnosis said it had applied to become an investment trust in order to "mitigate the recently increased scope of Guernsey's economic substance rules".

The company will be exempt from UK taxation on its chargeable gains, but will be subject to UK corporation tax on its income. In practice, the trust should be exempt from UK corporation tax on dividend income received.

As a result of the move, the Merck Mercuriadis-fronted vehicle will now distribute a minimum of 85% of its income.