IFM10330 - Tax treatment of a non-exempt unauthorised unit trust (NEUUT)

The income and gains of a NEUUT are within charge to corporation tax – see regulation 28 of the UUT Regulations (SI 2013/2819). UK resident trustees of a NEUUT are treated as if they are a UK resident company and the rights of unit holders as if they are shares in a company.

Any income and gains of a NEUUT arising on or after 6 April 2014 are chargeable to corporation tax and a NEUUT must prepare a corporation tax return.

A NEUUT may be required to pay its corporation tax by instalments depending on the level of its profits – see CTM92500.

Where a NEUUT pays out a distribution of income it will be treated as having paid out a UK dividend which will not be deductible in arriving at its taxable profits.

Transitional provisions for NEUUTs

Regulation 31 includes transitional provisions that apply for an unauthorised unit trust (UUT) that comes within charge to corporation tax on or after 6 April 2014. This could affect a UUT that became a NEUUT on that date, an exempt unauthorised unit trust whose approval has been withdrawn or a mixed unauthorised unit trust re-structured as a NEUUT.

A UUT that comes within charge to corporation tax on 6 April 2014 will file its final Trust Income Tax Return to 5 April 2014.

Any unrelieved trade losses of an existing UUT will not be relievable against trade profits of a NEUUT within charge to corporation tax.