PAIFs—taxation of the scheme
Produced in partnership with Martin Shah of Simmons & Simmons LLP based on material originally written by Charles Goddard of Rosetta Tax LLP
PAIFs—taxation of the scheme

The following Tax guidance note Produced in partnership with Martin Shah of Simmons & Simmons LLP based on material originally written by Charles Goddard of Rosetta Tax LLP provides comprehensive and up to date legal information covering:

  • PAIFs—taxation of the scheme
  • Entry into the regime
  • The ring-fence
  • Rules imposing a tax charge
  • Value Added Tax

The tax regime for Property Authorised Investment Funds (PAIFs, or, as HMRC refers to them in regulations and its published guidance, Property AIFs) is designed to create an open-ended collective investment vehicle for property which allows investors:

  1. to be taxed in the same way as if they invested in the property directly, and

  2. to benefit from:

    1. the professional management of the property held by the fund, and

    2. the collective investment power of the other investors in the fund

According to HMRC:

‘the regime exempts property income and gains from corporation tax, similarly to the way the UK-REITs regime exempts property income and gains from corporation tax for companies that are not collectives. This then allows an open-ended fund to be exempt from corporation tax on property income and gains in a similar way to that achieved for UK-REITs.’

This Practice Note considers the tax treatment of an OEIC which is subject to the PAIF regime, through meeting the conditions and electing into the regime by notice.

The detailed requirements of the conditions and the notice procedures are covered in Practice Note: PAIFs—the conditions.

General details of the tax treatment of OEICs within the PAIF regime are covered in Practice Note: PAIFs—summary.

Other aspects of the regime are examined in Practice Notes:

  1. PAIFs—taxation of the participants

  2. PAIFs—breach of the conditions and exit, and

  3. PAIFs—compliance and vouchers

In this Practice