IFM06310 - Tax elected funds (TEFs): tax treatment & distributions made by TEFs: introduction

The aim of the TEF regime is to move the point of taxation from the authorised investment fund (AIF) to the investor, and this chapter explains how this is achieved in most cases.

A TEF is required to identify the different components of its income, (see IFM06320) and to attribute the income to two types of distribution: a dividend distribution and a non-dividend distribution (taxed in the hands of the investor in the same way as a payment of yearly interest). The process of attributing the TEF’s income is set out in IFM06330.

UK investors are then taxed as though they have received a UK dividend and a payment of yearly interest, which is also explained in IFM06330.

The tax treatment of the component parts of the income received by the TEF is then explained in more detail in IFM06340.