The draft Finance Bill 2016 provides that, if an individual performs investment management services for a CIS, performance-linked rewards or carried interest arising from that CIS will subject to: (i) CGT treatment alone if the fund holds investments, on average, for at least four years; or (ii) part CGT treatment and part income tax and Class 4 NICs treatment if the average holding period is between three and four years; or (iii) income tax and Class 4 NICs treatment alone if the average hold period is below three years.  The measure is designed to ensure that carried interest only attracts CGT treatment for funds that carry on long-term investment activity. Otherwise, it is "income-based carried interest" and charged to tax and NICs as trading income under the existing disguised investment management fees rules. To prevent carried interest being charged to income tax in the early years of a fund's life, carried interest is provisionally charged to CGT provided certain conditions are met. The draft legislation also makes provision about derivatives and foreign exchange and interest rate hedging instruments. The legislation has effect for carried interest arising on or after 6 April 2016, regardless of when the arrangements under which the sums arise were made.