IFM07700 - Investors in tax elected funds (TEFs): TEF distributions (non-dividend): investors within the charge to income tax

Where a TEF makes TEF distributions (non-dividend) the investor is treated as receiving payments of yearly interest under regulation 69Z61 of SI2006/964.

For investors within the charge to income tax (IT), up to 5 April 2017 a sum representing IT at the basic rate was normally deducted at source by the TEF (IFM02800) and the investors were treated as receiving yearly interest with IT deducted at the basic rate. Higher and additional rate taxpayers had a further liability to tax. Investors with no liability to IT were able to reclaim the tax deducted and may have established entitlement to payment without deduction of tax.

From 6 April 2017 there is no requirement required to deduct tax at source from TEF distributions (non-dividend).