IFM08130 - Types of Authorised Contractual Scheme (ACS)
Types of ACS
An ACS may take one of two legal forms. Neither is subject to direct taxes but the tax treatment for UK investors is different in each case.
An ACS may be:
- A Co-ownership ACS; or
- A Partnership ACS.
The definition of each scheme can be found at section 235A of the Financial Services and Markets Act 2000.
Co-ownership ACS
A Co-ownership ACS (CoACS) is based on a contractual arrangement between the operator, depositary and investors.
Investors who are within the charge to UK income tax are taxable on their share of income as it arises. See IFM08500.
For the purposes of chargeable gains, the investor’s units in the CoACS are treated as their asset and the investors’ interests in the property subject to the scheme are disregarded. This means that the investor is only subject to tax when they dispose of some or all of their units in the CoACS. See IFM08600.
More details of the taxation of investors who are within charge to UK tax can be found via the main contents page (IFM08000).
Partnership ACS
A Partnership ACS is a limited partnership formed under the Limited Partnerships Act 1907 as modified by the Collective Investment in Transferable Securities (Contractual Scheme) Regulations 2013 (SI 2013/ 1388).
It is transparent for tax purposes and investors within the charge to UK income and capital gains tax are taxable on their share of income and chargeable gains as they arise. More details of the taxation of investors who are within charge to UK tax can be found via the main contents page (IFM08000).
Non-resident investors
Non-residents are only taxable in the UK on investment income arising in the fund if the income arises in the UK and is taxable in the UK, for example if income arises from the rental of property situated in the UK.
Non-residents are normally not liable to tax on gains in the UK. An exception for individuals will apply in certain circumstances where they are considered to be temporarily non-resident, see CG26520. For corporate non-resident investors the exception can apply where they carry on a trade in the UK through a permanent establishment, see CG42040.
The Government’s consultation on bringing non-residents within charge to tax on chargeable gains on UK property with effect from April 2019 has now closed and officials are currently working on the detail of the rules regarding collective investment vehicles. Draft guidance was published in December 2018.