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HMRC internal manual

Company Taxation Manual

AIFs: Property authorised investment funds (Property AIFs): tax treatment of Property AIFs and distributions: attribution of distributions

In accordance with the principles explained at CTM48811distributions made by a Property AIF must be split into three pools.

Attribution of distributions (regulation 69Z14 SI 2006/964)

In accordance with FSA rules for authorised investment funds, Property AIFs arerequired to distribute all their income to investors. However, to do this a Property AIFmust allocate the total distribution made as follows:

  • firstly, the net income from the tax-exempt business (see CTM48832) to a property income distribution (PID)),
  • secondly, to a Property AIF distribution (interest). The amount to be allocated to this category is the remaining income available for distribution up to the “pre-distribution amount” (see CTM48833), and
  • thirdly, the full remaining amount available for distribution must be allocated to Property AIF distributions (dividends).

The third amount will not necessarily correspond exactly to the amount received by theProperty AIF in UK-dividends as any differences between the accounting income of the tax-exempt part of the business and the net income calculated according to regulation 69Z1 SI2006/964 (see CTM48832) will be reflected here. See CTM48840 and CTM48841 for examples.

Each distribution payment is treated as being made on the distribution date by theProperty AIF to the investors in proportion to their rights.


When a distribution is made, the Property AIF must provide statements showing the grossamount of each allocation, any tax deducted and the net amount paid or, in the case of aProperty AIF distribution (dividend), the net amount and tax credit (see CTM48863).

Distributions made after leaving the regime (regulation 69Z21 SI 2006/964)

In the event that a Property AIF leaves the regime, then the rules above applying to aProperty AIF distribution still apply to any distribution made after the end of the finalaccounting period as a Property AIF, but in respect of the income of that accountingperiod.


CTM48840 and CTM48841 provide examples which illustratethe attribution of distributions. They also show how the dividend distribution may differfrom the exact amount received in dividends by the Property AIF. The first example (atCTM48840) shows the attribution of distributions where the accountancy income of thetax-exempt business is greater than the total PID and example 2 shows the effects of thedistribution when it is less than the total PID.