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HMRC internal manual

Company Taxation Manual

From
HM Revenue & Customs
Updated
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Tax elected funds (TEFs): tax treatment of distributions in the hands of participants: introduction

Once a tax elected fund (TEF) has identified the different components of its income and attributed it into two types of distributions as per CTM48933, it will make TEF distributions (dividends) and TEF distributions (non-dividends) in accordance with 69Z59 SI2006/964.

Under regulation 69Z60 SI2006/964 TEF distributions (dividends) are amounts available for distribution as dividends and are treated as dividends on shares which are paid on the distribution date.

Under regulation 69Z61 SI2006/964 TEF distributions (non-dividend) are amounts treated for the purposes of the Tax Acts as payment of yearly interest made on the distribution date.

This chapter sets out the tax treatment of such distributions in the hands of the participant.