IFM08510 | Taxation of income arising to UK investors in authorised contractual schemes (ACS): Introduction

Liability to tax on income

Investors in a co-ownership fund are taxable on their share of the fund’s income. This applies to both corporate and individual investors.

Any income received will be subject to the normal tax treatment applied to that type of income in the hands of that investor. For example, dividend income is likely to be non-taxable in the hands of a corporate investor. Income from property and interest received will need to be treated according to the general rules that apply to each stream of income. For some types of income the computation and the treatment is different for taxpayers within the charge to corporation tax (CT) and those within the charge to income tax (IT). See IFM08520 for taxation of investors who are subject to IT and IFM08530 for taxation of investors subject to CT.

{#}Impact of transparency on investors

Where the ACS has several different types of income then an investor is taxable on each type of income separately as it arises irrespective of whether the income is immediately, or at any time, passed to the investor.

This means that investors are relying on the operator of the ACS to provide details of the income arising to them. See IFM08220 and following pages for the specific legal requirements on Co-ownership ACS.

{#}Partnership ACS

Investors in a Partnership ACS are subject to tax on income in the same way as partners in any other limited partnership. See the Partnership Manual for details.