IFM07100 - Investors in tax elected funds (TEFs): tax treatment of distributions: introduction

TEFs make TEF distributions (dividends) and TEF distributions (non-dividends) in accordance with regulation 69Z59 of SI2006/964.

The following pages set out the tax treatment of TEF distributions in the hands of investors.

Information sent to investors by TEFs

Investors in a TEF will be sent information setting out the amounts and type of income arising to them – see IFM06400. Investors should retain this information sent to them, including making a copy of any information they access electronically.

Accumulation units

Accumulation units in a TEF give rise to income that is reinvested by the TEF on behalf of the investor (credited periodically to the capital property of the fund), rather than paid out to the investor.

Investors are liable to tax on income arising from accumulation units as if the money had been distributed (see IFM03120). Pages IFM07400 and IFM07600 apply equally to accumulation units and income units.