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HMRC internal manual

Company Taxation Manual

AIFs: Property authorised investment funds (Property AIFs): tax treatment of distributions in the hands of participants: participants within the charge to income tax - PAIF distributions (interest)

Under regulation 69Z19 SI 2006/964, income tax will normally be deducted at source by thefund at the savings rate and the participant is treated as receiving yearly interest withincome tax deducted at the savings rate.

For basic rate taxpayers, there will be no further liability to tax, but higher ratetaxpayers will have a further liability.

Participants with no liability to IT will be able to reclaim the tax deducted, asdescribed under property income distributions at CTM48854.

The Property AIF is responsible for deducting tax at the savings rate and for paying thetax deducted to HMRC.

As with property income distributions, no tax credit is allowable under section 397 ITTOIA2005 for PAIF (distributions) interest.