IFM09205 | Eligibility criteria: Introduction

For tax purposes, section 20 Finance (No. 2) Act 2024 provides both a definition of a RIF (including eligibility conditions) and a power to make tax regulations in connection with such a scheme.

Broadly, section 20(1)(a) to (c) of Finance (No. 2) Act 2024 provides that a RIF is a scheme that

• is not an authorised co-ownership scheme

• is an alternative investment fund (AIF) (as defined by SI 2013/1773, reg 3); and

• meets the conditions set out in section 261E(2) and (3), of FSMA 2000 (limiting to whom units may be issued to professional or large investors); and

• meets such other conditions as set out in the regulations

The regulations then further provide that a co-ownership scheme:

• is a RIF from the date specified in an entry notice provided it meets, or is treated as meeting, the qualifying conditions on that date (Regulations 3 and 4)

• must meet “qualifying conditions” in order to be a RIF (Regulation 5)

Those qualifying conditions are that the scheme:

• is UK-based (Regulation 6) - (IFM09210)

• meets the ownership requirement, by meeting either the genuine diversity of ownership condition or the non-close condition (Regulations 7 and 8) - IFM09220

• meets the restriction requirement (Regulation 10) - IFM09240, and

• meets the conditions in section 20(1)(a) to (c) of Finance (No.2) Act 2024

A RIF must also comply with certain other requirements as set out in the regulations. Breaches of the conditions or requirements can lead to a scheme losing its RIF status, and in limited circumstances, HMRC may revoke an entry notice or treat it as never having been made.