IFM11200 - Investors in an exempt unauthorised unit trust (EUUT) – distributions

Most eligible investors, such as pension funds or charities, are not taxable on income. Other eligible investors are taxable on their income – for example an authorised unit trust or an investment trust company.

Where the unit holder is carrying on a trade or a UK property business, priority rules apply to charge such income to tax as trade profits or income of a UK property business (see regulation 17 of SI 2013/2819). Where the priority rules do not apply, the income unit holders receive is savings and investment income which is neither dividend nor interest income.

Unit holders are treated as receiving income if an amount is shown in the accounts of an EUUT for a period of account as income available for payment to them or for investment – see regulation 15 of SI 2013/2819.

The date income is treated as received for a distribution period is in most cases provided for by the terms of the trust deed. If that date falls more than 12 months after the end of a distribution period the income is treated as received on the last day of the distribution period.

If the trust deed does not specify a date then income for a distribution period is treated as received on the last day of the distribution period.

In most cases the terms of the trust deed will provide for distribution periods of 12 months or less, and they will be ‘distribution periods’ for the purposes of Regulation 15. An EUUT’s period of account may have one or more distribution periods.