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HMRC internal manual

Company Taxation Manual

Tax elected funds (TEFs): tax treatment of distributions in the hands of participants: TEF distributions (dividends) - general treatment and taxation of investors within the charge to income tax

Where a TEF makes TEF distributions (dividends) the participant is treated as receiving a dividend distribution under regulation 69Z60 SI2006/964 (as explained in CTM48933). Amounts that are shown in the accounts of a TEF as available for distribution as dividends are treated as dividends on shares which are paid on the distribution date.

As with other dividend payments, these distributions carry a one ninth non-repayable tax credit that will satisfy any income tax liability at the basic rate. This means that IT payers with a liability at the basic rate will have no further tax liability on the dividend payments. Higher rate taxpayers will have a further liability.

For further information on the tax treatment of investors within the charge to corporation tax please refer to CTM48944.