SolvedIFM04376 | AIFs: Property authorised investment funds (PAIFs): tax treatment of PAIFs and distributions: attribution of distributions- notes to examples
From HM Revenue & Customs · Investment Funds Manual
| Notes | |
|---|---|
| 1 | (a) Excluding any property income outside the Property Rental Business (see IFM04130) |
| 1 | (b) Including rental income of consolidated Intermediate Holding Vehicles (IHVs) (similarly costs figures include costs of consolidated IHVs) |
| 2 | These must be limited to income within the property rental business |
| 3 | In this example the rental income from foreign property has been reduced by drop in value of foreign currency and a hedging instrument has provided compensation. |
| 4 | Limited by FCA regulation (or if the PAIF is a Qualified Investor Scheme then a tax charge may be incurred if tax limits exceeded - see IFM04350)\nSee also regulation 69Z1(3) for exception to exclusion of loan relationships from calculation of property rental business) |
| 5 | Management (eg agent’s fees), maintenance and insurance costs |
| 6 | Repairs - does not include improvements which are treated as capital expenditure and are not deductible |
| 7 | Services where income recognised as property income (see note 2) |
| 8 | Depreciation must be added back (follows from regulation 69Z1(2)) |
| 10 | Does not include non-property income distributions (PID) distributions from UK REITS which are UK dividends included in the income of the residual business |
| 11 | See IFM04130 |
| 12 | See regulation 69Z1(3) - inclusion of hedging instruments and embedded derivatives in so far as they relate to the tax-exempt business |
| 13 | See regulation 69Z1(7) |
| 14 | PAIF distribution (dividends) is adjusted to include all remaining distributable income (in this example by reversing ‘tax’ adjustments made to the PID amount) |