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HMRC internal manual

Company Taxation Manual

From
HM Revenue & Customs
Updated
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AIFs: Property authorised investment funds (Property AIFs): tax treatment of Property AIFs and distributions: attribution of distributions- notes to examples

  ### Notes
   
1 (a) Excluding any Schedule A income outside the Property Rental Business (see CTM48813)
  (b) Including rental income of consolidated Intermediate Holding Vehicles (IHVs) (similarly costs figures include costs of consolidated IHVs)
2 These must be limited to those within Schedule A - see Property Income Manual for more details
3 In this example the rental income from foreign property has been reduced by drop in value of foreign currency and a hedging instrument has provided compensation.
4 Limited by FSA regulation (or if the Property AIF is a Qualified Investor Scheme then a tax charge may be incurred if tax limits exceeded - see CTM48835)
  See also regulation 69Z1(3) for exception to exclusion of loan relationships from Schedule A calculation)
5 Management (eg agent’s fees), maintenance and insurance costs
6 Repairs - does not include improvements which are treated as capital expenditure and are not deductible
7 Services where income recognised as property income (see note 2)
8 Depreciation must be added back (follows from regulation 69Z1(2))
10 Does not include non-property income distributions (PID) distributions from UK-REITS which are UK dividends included in the income of the residual business
11 See CTM48813
12 See regulation 69Z1(3) - inclusion of hedging instruments and embedded derivatives in so far as they relate to the tax-exempt business
13 See regulation 69Z1(7)
14 PAIF distribution (dividends) is adjusted to include all remaining distributable income (in this example by reversing ‘tax’ adjustments made to the PID amount)