IFM03310 | Tax treatment of investors in authorised investment funds (AIFs): introduction

Investors in AIFs may be within the charge to either corporation tax (CT) or income tax (IT). The broad intention of the tax rules for AIFs is that investors should be in broadly the same tax position as if they had invested directly. Taxable income is subject to tax within the AIF.

Investors in AIFs may receive dividend distributions or interest distributions (or both from property authorised investment funds or tax elected funds – see IFM04000 and IFM 06000). For dividend distributions, the tax amount paid by the fund may be adjusted by investors within the charge to CT or higher and additional rate taxpayers within the charge to IT. For interest distributions the investor is liable to any tax at the appropriate rate.

The following pages set out the tax position of investors in charge to CT (from IFM03320) and IT (from IFM03350).