The income-based carried interest rules in Finance Act 2016 are based on an average holding period test. Favourable bespoke rules for calculating that average apply for a fund of funds, as defined. As a technical matter, certain funds of funds investing in closed-ended private investment funds may fall outside that definition, although this does not appear to be intended. Even for those funds which are within the definition, applying the rules is not straightforward. Managers of such funds of funds should look closely at whether and how the rules will apply and keep an eye on developments, in particular any future guidance from HMRC.