Status and timetable
Proposed, not law
Two documents published in July 2026 carry the reform: the Treasury's draft statutory instrument on the AIFM perimeter, and CP26/28, The UK AIFM Regime, with draft rule text annexed. Every figure and period below comes from one of them and binds nobody today.
Comments on the proposals, the draft rules and the prudential discussion chapter close on 14 October 2026 (1.30). Comments on the other discussion chapters closed on 18 September 2026 (1.31). The FCA aims to publish a final policy statement and final Handbook rules in 2027, in line with the Treasury's final statutory instrument (1.33), and intends implementation in 2028 (1.34).
Two statements point earlier. At 1.34 the FCA says it might be possible to stop requiring certain things immediately when the final legislation and policy statement are published, and at 1.35 that it will consider deleting rules sooner. Neither names a rule, and transitional arrangements remain the Treasury's to set.
The proposed size tiers
Draft ALTS 2.3.10R would classify an authorised UK AIFM by the aggregate net asset value of the funds it manages: small below £750 million, medium from £750 million to £5 billion, large above £5 billion. The £750 million figure replaces the £100 million proposed in the Call for Input (2.9), and the £5 billion upper figure is carried forward (2.11).
The proposed calculation
Draft ALTS 2.3.4R to 2.3.9R would set a four-step calculation. Step one identifies the funds: include every AIF whose functions the firm has delegated to another person; exclude any AIF for which the firm carries on AIFM management functions for another AIFM or person under a delegation arrangement; and treat the firm as the AIFM whether it manages a fund directly or indirectly through a company or person linked by common management or control or a substantive holding. Step two values the assets and liabilities under the proposed valuation rules. Step three calculates each fund's NAV averaged over the most recent quarter of a calendar year and aggregates the means. Step four compares it against the table.
Where a firm is both an AIFM and a residual CIS operator, draft ALTS 2.3.3G(2) would determine classification on the aggregate of the funds it manages and the residual schemes it operates. CP26/28 2.14 counts CIS and non-CIS AIFs and any residual non-AIF, non-UCITS CIS.
Recalculation under draft ALTS 2.3.5R would be event-driven: a material change to the volume or value of the firm's business which may affect its classification; a significant change in the value of assets managed; and, for an open-ended fund, at least monthly or at the lesser valuation frequency the rules permit. Material change is a defined term in regulation; significant change in value is not, and at 2.16 the FCA asks firms to use good judgement about when a change in investments might change their size.
Proposed notification, transition and election
Notification would be the only immediate step. Draft ALTS 2.3.20R would require an authorised UK AIFM to notify the FCA of its classification immediately on determining it, on making an election, and on becoming aware of a new classification. Notification would run through a SUP 15 firm material change form (2.17, 2.21), and crossing a threshold in either direction needs no change of authorisation, permissions or requirements (2.20).
| Event | Proposed period |
|---|---|
| Classification increases | 6 months from notification to comply (ALTS 2.3.19R(2)(b), 2.18) |
| A depositary becomes required | 12 months from notification, CASS 6 custody rules applying meanwhile (ALTS 2.3.19R(2)(a), 2.18, 2.25) |
| Classification changes more than once in a calendar year | Both periods restart at the beginning of the next calendar year (ALTS 2.3.19R(3), 2.19) |
| Election up, or down | Up: the same 6 and 12 month periods (ALTS 2.3.18R(4)(b)). Down: immediate compliance (ALTS 2.3.18R(4)(a)) |
An election could be made only once in a calendar year, in either direction (ALTS 2.3.18R(3), 2.22). At 2.12 the FCA says smaller firms might apply parts of the large-firm rules voluntarily without changing classification. The Register would show permission to manage an AIF but not the classification (2.22).
Tier content and populations
The rules proposed for small AIFMs are those the FCA considers essential for firms of any size, with the medium and large rules building on them (2.23). Those for large AIFMs are pitched at standards equivalent to the current full-scope regime, modified for rules the FCA considers unnecessary or not working well (2.24).
The FCA estimates 1,007 small, 175 medium and 64 large AIFMs under the proposals. All 475 small authorised AIFMs would be small; 463 current full-scope firms would be reclassified small, on the FCA's assumption that a full-scope firm is likely to be small where NAV data are unavailable; 69 small registered firms would become small AIFMs (Annex 2, paragraph 71). Registration is proposed to go except for Registered Venture Capital Funds and Social Enterprise Funds, with no grandfathering, so those 69 firms would need authorisation (1.8, 1.9). The draft statutory instrument would exempt small internally managed investment companies listed on a recognised UK exchange, on five cumulative criteria, using the legacy thresholds converted to sterling: £100 million leveraged, £500 million unleveraged with no redemptions within five years (11.9, 11.10).
Obligations in force meanwhile
Annex IV reporting binds a full-scope UK AIFM through FUND 3.4.2R and SUP 16.18. At 1.20 the FCA says the Treasury will revoke the AIFMD reporting requirements and that it will replace them with simplified reporting for all asset managers. Until that happens the rule stands. The replacement is consulted on separately in CP26/26 (FRAME), and a single remuneration code for asset managers in CP26/27 (1.19, 1.24).
The threshold in force does not translate into the proposed one. The line between a small AIFM and a full-scope AIFM sits in regulation 9 of the AIFMD UK Regulation, in euros, measured on assets under management with a leverage calculation. The proposal is sterling, net asset value and no leverage adjustment.
Alongside this module
Where this subject is covered elsewhere in the course.