Unauthorised unit trusts: tax year 2013 to 2014

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Unauthorised unit trusts

Changes to the tax regime for unauthorised unit trusts (UUTs) were set out in detail in a Technical Note.

Some UUTs will see a change of basis period for calculating income when filling in the Tax Return for the year 2013 to 2014. This will depend on whether the UUT is:

a mixed UUT
a non-exempt UUT
an exempt UUT

If you’re a trustee, you’ll need to decide the basis period to use when filling in your Tax Return (SA900) for the tax year 2013 to 2014.

If you’re the trustee of an ‘exempt’ unauthorised unit trust, with an accounting date ending after 31 October 2013, there are different rules you’ll need to apply for the transitional year.

Mixed UUTs

Any UUT with at least one exempt unit holder and one non-exempt unit holder for the entire period from 24 May 2012 to 5 April 2014 will be a mixed UUT and will complete its Tax Return (SA900) for the tax year 2013 to 2014 in the same way as for earlier tax years.

Non-exempt UUTs

A non-exempt UUT is a UUT that is neither an exempt UUT nor a mixed UUT. Tax year 2013 to 2014 is the final tax year for which a non-exempt UUT has to file a Tax Return (SA900) for income tax purposes and these are the transitional rules:

any accrued income profits which would arise after 5 April 2014 will be treated as arising on 5 April 2014
any deemed payment of income which would have been treated as arising to unit holders after 5 April 2014 will be treated as arising on 5 April 2014 and the non-exempt UUT will be entitled to a deduction for the deemed payment of this income on 5 April 2014

A non-exempt UUT will be within charge to Corporation Tax from 6 April 2014 and should notify HMRC as soon as possible and must do so within 12 months of the last day of its first accounting period ending on or after 6 April 2014. A new accounting period starts when a non-exempt UUT first comes within the charge to Corporation Tax.

A non-exempt UUT within the charge to Corporation Tax may also be liable to pay tax by Quarterly Instalment Payments if it is large (see CTM92510 et seq for further guidance or contact a relevant member of the CISC team. The first quarterly instalment will be payable six months and 13 days after the start of the accounting period.

Exempt UUTs

An exempt UUT is one whose Trustees are UK resident and whose investors are all exempt from Capital Gains Tax or Corporation Tax on chargeable gains (other than because of residence), and must be approved under the regulations as an exempt UUT.

An exempt UUT with an accounting date on or before 31 October 2013 will complete its Tax Return (SA900) for the tax year 2013 to 2014 in the same way as for earlier tax years. For such an exempt UUT the transitional year will be the tax year 2014 to 2015.

For an exempt UUT with an accounting date after 31 October 2013 the tax year 2013 to 2014 is the transitional year and these are the transitional rules:

income for the tax year 2013 to 2014 will be income arising between 6 April 2013 and the accounting date in that year
all income shown in the accounts for that period is treated as arising in tax year 2013 to 2014
any deemed payment of income for that period which would have been treated as arising to unit holders after 5 April 2014 will now be treated as arising on 5 April 2014 and the exempt UUT will be entitled to a deduction for the deemed payment of this income on 5 April 2014

Filing requirements

Continuing requirements for approval are detailed on form Collective Investment Schemes: exempt unauthorised unit trust - annual report (CISC12). The form CISC12 can be sent as a PDF attachment, together with accounts, when filing your return online.

Trustees Income Pool

The Trustees Income Pool is a running total of the excess of modified unrelieved total income over deemed payments. Where the deemed payments treated as made in the transitional year exceed the trustees modified net income for that year, the deemed payments may be reduced by the Trustees Income Pool.

If the transitional year of the ‘exempt UUT’ is 2013-14, because the accounting period ends after 31 October 2013, you will need to calculate the Trustees Income Pool at 6 April 2013 and notify HMRC of this. If the transitional year of the EUUT is 2014-15, because the accounting period ends on or before 31 October 2013, you will need to calculate the Trustees Income Pool at 6 April 2014 and notify HMRC of this in due course. You can show details of your workings in the ‘Additional Information’ space at box 21.11 of the SA900 or attach these separately.

Accounting Date

In all cases, details of the UUT’s accounting date should be included in the Tax Return, again in the ‘Additional Information’ space at box 21.11.

Unauthorised unit trusts: tax year 2013 to 2014