PART XII SPECIAL CLASSES OF COMPANIES AND BUSINESSES
CHAPTER III UNIT TRUST SCHEMES, DEALERS IN SECURITIES ETC.
Unit trust schemes
C2468 Authorised unit trusts.
1
M1In respect of income arising to the trustees of an authorised unit trust, and for the purposes of the provisions relating to relief for capital expenditure, the Tax Acts shall have effect as if—
a
the trustees were a company resident in the United Kingdom; and
b
the rights of the unit holders were shares in the company;
F48but paragraph (b) above is without prejudice to the making of distributions which are interest distributions (within the meaning of F58regulations made under section 17(3) of the Finance (No. 2) Act 2005 (as at 1st April 2006, see regulation 18(3) of the Authorised Investment Funds (Tax) Regulations 2006 (S.I. 2006/964))) to unit holders.
F54C31A
In relation to any authorised unit trust the rate of corporation tax for the financial year 1996 and subsequent financial years shall be deemed to be the rate at which income tax at the F61basic rate is charged for the year of assessment which begins on 6th April in the financial year concerned F59and section 13 shall not apply.
2
F49. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
4
F57. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
F56. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
C16
F51 Subject to subsections (7) to (9) below in this section—
“authorised unit trust” means, as respects an accounting period, a unit trust scheme in the case of which an order under section F55 243 of the Financial Services and Markets Act 2000 is in force during the whole or part of that accounting period;
F52. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
“unit holder” means a person entitled to a share of the investments subject to the trusts of a unit trust scheme; F60. . .
F60. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F537
Each of the parts of an umbrella scheme shall be regarded for the purposes of this Chapter as an authorised unit trust and the scheme as a whole shall not be so regarded.
8
In this section, “umbrella scheme” means a unit trust scheme—
a
which provides arrangements for separate pooling of the contributions of the participants and the profits or income out of which payments are to be made to them;
b
under which the participants are entitled to exchange rights in one pool for rights in another; and
c
in the case of which an order under section F55243 of the Financial Services and Markets Act 2000 is in force;
and any reference to a part of an umbrella scheme is a reference to such of the arrangements as relate to a separate pool.
9
In relation to a part of an umbrella scheme, any reference—
a
to investments subject to the trusts of an authorised unit trust, shall have effect as a reference to such of the investments as under the arrangements form part of the separate pool to which the part of the umbrella scheme relates; and
b
to a unit holder, shall have effect as a reference to a person for the time being having rights in that separate pool.
F1468AA Authorised unit trusts: futures and options.
F2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F3468A Certified unit trusts.
F4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F18468AOpen-ended investment companies
1
In relation to an open-ended investment company the rate of corporation tax for the financial year 2005 and subsequent financial years shall be deemed to be the rate at which income tax at the F63basic rate is charged for the year of assessment which begins on 6th April in the financial year concerned F62(and section 13 shall not apply).
C42
In this section “open-ended investment company” means a company incorporated in the United Kingdom to which section 236 of the Financial Services and Markets Act 2000 applies.
C43
Each of the parts of an umbrella company shall be regarded for the purposes of this section as an open-ended investment company and the umbrella company as a whole shall not be so regarded (and shall not, unless an enactment expressly provides otherwise, be regarded as a company for any other purpose of the Tax Acts).
C44
In subsection (3) “umbrella company” means an open-ended investment company—
a
in respect of which the instrument of incorporation provides arrangements for separate pooling of the contributions of the shareholders and the profits or income out of which payments are to be made to them, and
b
the shareholders of which are entitled to exchange rights in one pool for rights in another,
and a reference to part of an umbrella company is a reference to a separate pool.
F5468B Certified unit trusts: corporation tax.
F6. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F7468C Certified unit trusts: distributions.
F8. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F9468D Funds of funds: distributions.
F10. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F11468E Authorised unit trusts: corporation tax.
F12. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
468EEF19 Corporation tax: cases where lower rate applies.
F13. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F14468F Authorised unit trusts: distributions.
F15. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F16468G Dividends paid to investment trusts.
F17. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F46 Distributions of authorised unit trusts: general
468H Interpretation.
F20. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
468I Distribution accounts.
F21. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividend and foreign income distributions
468J Dividend distributions.
F22. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
468K Foreign income distributions.
F23. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest distributions
468L Interest distributions.
F24. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F25468M Cases where no obligation to deduct tax
F26. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
468N Deduction of tax (mixed funds).
1
Subsection (2) below applies where—
a
an interest distribution is made for a distribution period to a unit holder; and
b
the gross income entered in the distribution accounts for the purposes of computing the total amount available for distribution to unit holders does not derive from eligible income entirely.
2
Where this subsection applies, the obligation to deduct under section 349(2) shall not apply to the relevant amount of the interest distribution to the unit holder if the residence condition is on the distribution date fulfilled with respect to him.
3
Section 468O makes provision with respect to the circumstances in which the residence condition is fulfilled with respect to a unit holder.
4
This is how to calculate the relevant amount of the interest distribution—
Where—
R = the relevant amount;
A = the amount of the interest distribution before deduction of tax to the unit holder in question;
B = such amount of the gross income as derives from eligible income;
C = the amount of the gross income.
5
In subsection (4) above the references to the gross income are references to the gross income entered as mentioned in subsection (1)(b) above.
468O Residence condition F27and reputable intermediary condition.
F28. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
468P Residence declarations.
F29. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
468PAF32Section 468O(1A): consequences of reasonable but incorrect belief
F30. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
468PBRegulations supplementing sections 468M to 468PA
F31. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Distributions to corporate unit holder
468Q Dividend distribution to corporate unit holder.
F33. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
468R Foreign income distribution to corporate unit holder.
F34. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
C5469 Other unit trusts.
1
This section applies to—
a
b
F75. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
except where the trustees of the scheme are not resident in the United Kingdom.
2
Income arising to the trustees of the scheme shall be regarded for the purposes of the F80Corporation Tax Acts as income of the trustees (and not as income of the unit holders) F86; and the trustees (and not the unit holders) shall be regarded as the persons to or on whom allowances or charges are to be made under the provisions of those Acts relating to relief for capital expenditureF81. . . .
F782A
F82. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F792B
F82. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
F82. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
F82. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F834A
F88. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4B
F88. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4C
F88. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4D
F88. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
F88. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F765A
F84. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5B
F84. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5C
F84. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5D
F84. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6
F88. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F776A
F87. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
F84. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8
F84. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9
F84. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10
F84. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11
This section shall have effect in relation to distribution periods beginning on or after 6th April 1987.
F37469A Court common investment funds.
1
The Tax Acts shall have effect in relation to any common investment fund established under section 42 of the M3Administration of Justice Act 1982 (common investment funds for money paid into court) as if—
a
the fund were an authorised unit trust;
b
the person who is for the time being the investment manager of the fund were the trustee of that authorised unit trust; and
c
F89the persons with qualifying interests were the unit holders in that authorised unit trust.
F901A
For the purposes of subsection (1)(c) above, the persons with qualifying interests are—
a
in relation to shares in the fund held by the Accountant General, the persons whose interests entitle them, as against him, to share in the fund’s investments;
b
in relation to shares in the fund held by any other person authorised by the Lord Chancellor to hold such shares on behalf of others (an “authorised person”)—
i
if there are persons whose interests entitle them, as against the authorised person, to share in the fund’s investments, those persons;
ii
if not, the authorised person;
c
in relation to shares in the fund held by persons authorised by the Lord Chancellor to hold such shares on their own behalf, those persons.
2
3
F92. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
470 Transitional provisions relating to unit trusts.
1
F35. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F362
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
F35. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dealers in securities, banks and insurance businesses
471 Exchange of securities in connection with conversion operations, nationalisation etc.
F38. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
472 Distribution of securities issued in connection with nationalisation etc.
F39. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
472AF45Trading profits etc. from securities: taxation of amounts taken to reserves
F40. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
473 Conversion etc. of securities held as circulating capital.
F41. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
474 Treatment of tax-free income.
1
F42. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
F43. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F443
F42. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
475 Tax-free Treasury securities: exclusion of interest on borrowed money.
F651
This section has effect where a banking business, an insurance business or a business consisting wholly or partly in dealing in securities—
a
is carried on in the United Kingdom by a person not ordinarily resident there; and
b
in computing for any of the purposes of F71the Income Tax Acts the profits arising from, or loss sustained, in the business, any amount which would otherwise be brought into account is disregarded by virtue of a condition subject to which any 3½% War Loan 1952 or after was issued;
and for this purpose insurance business includes insurance business of any category.
2
Up to the amount determined under this section (“the amount ineligible for relief”), interest on money borrowed for the purposes of the business—
a
3
Subject to subsection (4) below, in determining the amount ineligible for relief, account shall be taken of all money borrowed for the purposes of the business which is outstanding in the accounting or basis period, up to the total cost of the F673½% War Loan 1952 or after held for the purpose of the business in that period.
4
Where the person carrying on the business is a company, account shall not be taken of any borrowed money carrying interest which, apart from subsection (2) above, does not fall to be included in the computations under paragraph (a) of that subsection F73. . . .
5
F68. . . The amount ineligible for relief shall be equal to a year’s interest on the amount of money borrowed which is to be taken into account under subsection (3) above at a rate equal to the average rate of interest in the accounting or basis period on money borrowed for the purposes of the business, except that in the case of a period of less than 12 months interest shall be taken for that shorter period instead of for a year.
6
F69. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
F69. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8
For the purposes of this section the cost of a holding of F673½% War Loan 1952 or after which has fluctuated in the accounting or basis period shall be the average cost of acquisition of the initial holding, and of any subsequent acquisitions in the accounting or basis period, applied to the average amount of the holding in the accounting or basis period, F70. . . .
9
In this section “accounting or basis period” means the company’s accounting period or the period by reference to which the profits or gains arising in the year of assessment are to be computed.
Ss. 468H-468R and cross-headings inserted (with effect in accordance with Sch. 14 para. 7 of the amending Act) by Finance Act 1994 (c. 9), Sch. 14 para. 2