The following Tax guidance note provides comprehensive and up to date legal information covering:
Unit trusts, as a vehicle-type, are chiefly used as investment vehicles. An ‘unauthorised’ unit trust (UUT) is a unit trust that has not been authorised under the Financial Services and Markets Act 2000 (FSMA 2000).
Unit trusts are constituted by trustees holding assets on trust for unitholders. The trustees hold the legal title to the fund's assets but are legally obliged to apply those assets for the benefit of the unitholders. A fund manager will provide investment advice to the trustees.
Investment in a unit trust can only be promoted to the UK general public if the unit trust has been authorised under FSMA 2000. However, in order to obtain authorisation under FSMA 2000 a unit trust must comply with a number of different regulatory provisions, including restrictions on its investment powers. UUTs can therefore be used for more investment flexibility but at the cost that they can only be marketed to a more limited class of investors—broadly speaking: institutional, sophisticated or high net worth investors.
The tax legislation applicable to UUTs was overhauled with effect from 6 April 2014 and is now found primarily in the Unauthorised Unit Trusts (Tax) Regulations 2013, SI 2013/2819 (the UUT Regulations).
For a discussion of the various practical uses to which UUTs are put and some of the issues
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