Property Authorised
Investment Funds

Corporation tax exemption on a pool of income and gains

A Property Authorised Investment Fund (Property AIF) is an open-ended investment company which is a form of authorised investment fund. Its investment portfolio comprises predominantly one or more of:

real property (commercial and residential)

shares in UK Real Estate Investment Trusts (UK- REITs)

shares in certain foreign entities equivalent to UK-REITs

A Property AIF is exempt from corporation tax on a pool of income and gains arising from investment in the type of property assets listed above.

The investors in a Property AIF will then receive the income arising to the tax-exempt pool as a Property Income Distribution (PID) which is treated for the investor’s tax in the same way as the profits of a UK property business.

Investors may also receive two other types of income from a Property AIF:

PAIF distribution (interest) – treated by the investor as a payment of interest

PAIF distribution (dividends) – treated by the investor as a UK dividend (and which carries the same tax credit as other dividends)

All individual investors will receive a PID and a PAIF distribution (interest) after deduction of basic rate income tax. Some other categories of investor are entitled to receive payment without deduction of tax.

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