IFM03322 - Authorised investment funds (AIFs): taxation of investors within the charge to CT: interest distributions

From 6 April 2017 all interest distributions by AIFs are paid gross. Investors within the charge to corporation tax (CT) are treated as receiving a gross amount of yearly interest as a loan relationship credit (see IFM03324).

Prior to 6 April 2017 companies and other specified investors (see IFM02800 onwards) received interest distributions without deduction of tax. However, where the recipient of the interest distribution acted as a nominee for the person beneficially entitled to it, income tax was deducted at source by the AIF and the investor was treated as receiving yearly interest with IT deducted at a rate equal to the basic rate of income tax.