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HMRC internal manual

Investment Funds Manual

Exempt unauthorised unit trust (EUUT): basis periods

As explained in IFM10240, the general rule is that the basis period for a tax year will be the period of 12 months beginning immediately after the end of the basis period for the previous tax year and ending with the accounting date in the current tax year. The accounting date for a tax year means the date in the tax year to which accounts are drawn up and if there are two or more such dates, the latest of them.

Example 1

Current tax year is 2016-17. The accounting date is 30 November annually. The basis period for the previous tax year ended on 30 November 2015.

  • The basis period for the tax year 2016-17 is therefore 1 December 2015 to 30 November 2016.

The first tax year that a trust is approved as an EUUT is the tax year that includes the first day of the first period of account for which approval has been given. This first period of account may be a period of up to 18 months and in some cases there may not be an accounting date in either the first or second tax years. Special rules may apply for the first, second or third tax years and in each case the basis period commences on the first day of the first period of account in respect of which the trust is approved as an EUUT.

Example 2

A UUT is approved as an EUUT from 1 November 2014 and prepares Accounts for the 18 months ending 30 April 2016 and to 30 April each year thereafter. The first tax year for the EUUT is 2014-15. There is no accounting date in that tax year nor in tax year 2015-16 because the first accounting date is 30 April 2016, so there is no income for the tax years 2014-15 and 2015-16.

  • The basis period for 2016-17 is 1 November 2014 to 30 April 2016.
  • The basis period for 2017-18 will be the period of 12 months ending 30 April 2017.

After the first basis period, if there is no accounting date in the tax year the basis period is the period of 12 months beginning immediately after the end of the basis period for the previous tax year. Where a basis period exceeds 12 months or in other cases where it may be necessary to allocate income, this will be done on the basis of general tax principles. Investment income will be allocated on the basis of when it arises.

Example 3

A UUT is approved as an EUUT from 1 January 2015 and prepares accounts for the 12 months ending 31 December 2015, and then for the 6 months ended 30 June 2016 at which time the EUUT is closed down.

  • The basis period for 2015-16 is the period of 12 months ending 31 December 2015.
  • The basis period for 2016-17 is the period of 6 months ending 30 June 2016.

Example 4

A UUT is approved as an EUUT from 1 January 2016 and prepares Accounts for the 12 months ended 31 December 2016. Accounts are then prepared for the four months ending 30 April 2017 and also for the 11 months ending 31 March 2018. Thereafter Accounts are prepared to 31 March each year.

  • The basis period for 2016-17 is the period of 12 months ending 31 December 2016.
  • There are two accounting dates in 2017-18 (30 April 2017 and 31 March 2018), the later date applies for the basis period rules, so the basis period for 2017-18 is 1 January 2017 to 31 March 2018.
  • The basis period for 2018-19 is the period of 12 months ending 31 March 2019.