IFM02120 - Authorised investment funds (AIFs): authorised unit trusts

Meaning of authorised unit trust - section 616 of the Corporation Tax Act 2010

“Authorised unit trust” (AUT) means, as respects an accounting period, a unit trust scheme in the case of which an order under section 243 of The Financial Services And Markets Act 2000 is in force during the whole or part of that accounting period.

A unit trust is authorised when the Financial Conduct Authority (FCA) makes an order under section 243. An AUT must conform to the FCA regulations for authorised investment funds.

AUTs are trusts and have trustees who are the legal owners of the investments constituted by the fund and a fund manager who is responsible for managing the invested funds. The investors own units in the fund and are the beneficial owners of the assets of the fund.

Section 616 provides that the Tax Acts shall apply as if the trustees of an AUT were a company resident in the UK and as if the rights of unit holders were shares in that company. That means the trustees of an AUT are within the charge to corporation tax.

AUTs are a form of authorised investment fund (IFM02110) and are subject to the tax rules in The Authorised Investment Fund (Tax) Regulations 2006 (SI 2006/964). “Authorised investment fund” is defined regulation 3 and includes both AUTs and open-ended investment companies (IFM02130).