Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

Company Taxation Manual

From
HM Revenue & Customs
Updated
, see all updates

Tax elected funds (TEFs): provisions for providing tax information to participants: example of alternative rules for providing tax information to participants

Example

If a participant has units in a tax elected fund (TEF) and holds 100 net income units or 100 gross income units (that is units that allow a participant to receive gross distributions - see CTM48420), with an equal split of dividends and non dividends, the following example shows the information that should be provided to the participant under the new provisions in regulation 70(4) SI2006/964, as amended by regulation 25 SI2009/2036.

Example of generic information that should be sent to the participant

  Net income units OR Gross income units
       
Date of payment 1 October 2011   1 October 2011
Gross amount of distribution £100   £100
Number & class of units 100 income units   100 gross units
Net amount of distribution per unit £0.90   £1.00
Whether tax has been deducted Yes   No
Date of distribution 1/10/2011   1/10/2011
% split of the gross amount between divs/non divs 50% dividends    
50% non dividends   50% dividends
50% non dividends

Electronic information made available to the participant

On receipt of the generic information, the participant should be given clear instructions on how to access the further information required to complete their return electronically or by an alternative method. Using the example above, the information below gives an indication of what information should be accessible electronically or by other means, with the necessary information required to complete a written statement emphasised in bold (as set out in CTM48953).

For 100 net income units

Date of payment 1 October 2011

Gross amount of distribution = £100 (£50 dividends and £50 non dividends)

Actual amount received = £90 (90p x 100 units)

The actual amount received is made up of:

£50.00 dividends (This should be entered onto your tax return in the box relating to Dividends from UK companies)

£40.00 non dividend (interest) (This amount should be entered onto your tax return in the box relating to income from UK bank, building society, unit trust etc interest amount which has been taxed already, that is the net amount after tax)

The dividend amount has a 1/9 tax credit of £5.56

The non dividend (interest) is the amount after basic rate income tax has been deducted @20% of £10.

For 100 gross income units

These units should not be held by UK resident individual taxpayers (except within an ISA) therefore there is no need to specify the boxes the final distributions should be entered into onto the tax return.

Date of payment 1 October 2011

Gross amount of distribution = £100 (£50 dividends and £50 non dividends)

Actual amount received = £100 (£1 x 100 units)

The actual amount received is made up of:

£50.00 dividends

£50.00 non dividend (interest) (In the event that that you are liable to UK income tax then the income received should be recorded on your tax return in the box relating to untaxed UK interest etc.)

The dividend amount has a non-payable 1/9 tax credit of £5.56 which can be used towards any UK tax liability arising on the dividend amount. No tax has been deducted.

The non dividend (interest) is the gross amount received as no tax has been deducted.

Accumulation units

The amounts accumulated should be dealt with in the same way as the amounts distributed. Therefore, if the example included 100 net accumulation units and 100 gross accumulation units then the example above would be identical except that instead of showing the net amount distributed it would show the net amount accumulated per unit.