IFM04376 - AIFs: Property authorised investment funds (PAIFs): tax treatment of PAIFs and distributions: attribution of distributions- notes to examples

Notes to examples in pages IFM04372 and IFM04374.

	Notes
1	(a) Excluding any property income outside the Property Rental Business (see IFM04130)
1	(b) Including rental income of consolidated Intermediate Holding Vehicles (IHVs) (similarly costs figures include costs of consolidated IHVs)
2	These must be limited to income within the property rental business
3	In this example the rental income from foreign property has been reduced by drop in value of foreign currency and a hedging instrument has provided compensation.
4	Limited by FCA regulation (or if the PAIF is a Qualified Investor Scheme then a tax charge may be incurred if tax limits exceeded - see IFM04350)\nSee also regulation 69Z1(3) for exception to exclusion of loan relationships from calculation of property rental business)
5	Management (eg agent’s fees), maintenance and insurance costs
6	Repairs - does not include improvements which are treated as capital expenditure and are not deductible
7	Services where income recognised as property income (see note 2)
8	Depreciation must be added back (follows from regulation 69Z1(2))
10	Does not include non-property income distributions (PID) distributions from UK REITS which are UK dividends included in the income of the residual business
11	See IFM04130
12	See regulation 69Z1(3) - inclusion of hedging instruments and embedded derivatives in so far as they relate to the tax-exempt business
13	See regulation 69Z1(7)
14	PAIF distribution (dividends) is adjusted to include all remaining distributable income (in this example by reversing ‘tax’ adjustments made to the PID amount)