IFM02210 - Authorised investment funds (AIFs): taxation of funds: taxation of funds: introduction

Sections 613 and 617 of the Corporation Tax Act 2010 (CTA10)

These sections deal with open-ended investment companies (OEICs) and authorised unit trusts (AUTs) and set out the basic tax charges applying to an AIF.

Section 617 treats an AUT for purposes of tax on its income as if the trustees were a company resident in the UK. AUTs and OEICs are investment companies within Part 16 of the Corporation Tax Act 2009.

An AIF is therefore an investment company within the charge to CT. Detailed tax rules for AIFs are contained in The Authorised Investment Funds (Tax) Regulations 2006 (SI2006/964), made under section 17(3) of Finance Act (No 2) 2005.

Special rate of CT

An AIF is chargeable to CT on its taxable income at the funds rate of tax, which is equal to the basic rate of income tax (section 618 CTA10).

Chargeable gains

The chargeable gains of AIFs are exempt from CT under section 100 of the Taxation of Chargeable Gains Act 1992.