Find out about unauthorised unit trusts, how to apply to HM Revenue and Customs (HMRC) for exempt status and annual filing rules.
An unauthorised unit trust (UUT) is any unit trust which hasn’t been authorised under Section 243 of the Financial Services and Markets Act (FSMA) 2000 by the Financial Services Authority.
Types of UUTs
The tax treatment of a UUT depends on whether it’s:
- an exempt UUT
- a non-exempt UUT
- a pension fund pooling scheme
An exempt UUT must:
- have trustees who are UK resident
- have investors who are exempt from Capital Gains Tax or Corporation Tax on chargeable gains (for reasons other than residency)
- be approved by HMRC
How to apply for exempt status
Use form CISC11 to apply to HMRC, no later than the last day of the first period of account for which approval is sought.
Each year an exempt UUT must prepare:
- a self assessment tax return (SA900)
- trust accounts prepared in accordance with the Investment Management Association Statement of Recommended Practice or its principles for determining revenue and capital, and must be audited by a qualified independent auditor as being so prepared
- a statement using form CISC12 confirming that throughout the period all investors were ‘eligible investors’
If you’re filing your return online, the CISC12 and a copy of the audited accounts can be sent as PDF attachments.
If you don’t file by the self assessment filing deadline HMRC may withdraw approval as an exempt UUT.
A non-exempt UUT is subject to Corporation Tax on its income and gains and must tell HMRC of this within 12 months of the last day of its first accounting period.
Each year a non-exempt UUT must prepare:
- a Corporation Tax self-assessment return
- accounts and computations
Further guidance is available about UUT tax changes.
General guidance on UUTs can be found in the Savings and Investment Manual.
Pension funds pooling schemes
A unauthorised unit trust can elect to be a pension fund pooling scheme (PFPS) if it meets certain conditions in Regulation 4(3) of the Income Tax (Pension Funds Pooling Schemes) Regulations 1996 (SI1996/1585).
PFPS aren’t included in the Income Tax definition of unit trust scheme.
The participants and not the trustee are entitled to the income arising to the fund in proportion to their interest in the fund (determined by the size of each participant’s unit holding).
If any Income Tax is due on the income arising to the participants, it’s the participants and not the trustee who are responsible for payment.
To find out if your PFPS meets the conditions please contact the Collective Investment Schemes Centre.
You can read the regulations on the Legislation website.