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HMRC internal manual

Company Taxation Manual

Tax elected funds (TEFs): introduction & conditions of membership for the TEF regime: overview of conditions of membership

Entry into the Tax Elected Fund (TEF) regime is subject to HMRC approval. The manager of the fund, or proposed manager for a newly formed fund, must make an application in writing to HMRC that it wants the TEF rules to apply from a given date. The fund must be an open-ended investment company (OEIC) or an authorised unit trust (AUT) (see CTM48110) and meet the following conditions:

  • the property condition (CTM48913);
  • the genuine diversity of ownership (GDO) condition (CTM48914);
  • the loan creditor condition (CTM48915); and,
  • the scheme documentation condition (CTM48916).

An application for the TEF regime will apply from the beginning of an Accounting Period (AP) for an existing and newly formed fund - see CTM48923 for precise details. The term AP, for the purposes of this guidance, is as defined in CTA 2009/S9.