STSM101310 - Introduction to Collective Investment Schemes: Reserved Investor Funds: Overview
What is a Reserved Investor Fund (RIF)?
A RIF is a form of collective investment scheme, legally structured as a UK-based unauthorised co-ownership alternative investment fund (AIF).
Conditions relating to RIFs are set out in section 20(1) of the Finance (No.2) Act 2024, and the Co-ownership Contractual Schemes (Tax) Regulations 2025 (SI 2025/200).
For a co-ownership scheme to be a RIF, it must meet the conditions in section 20(1)(a) to (c) of F(No.2) A 2024, namely it is a co-ownership scheme which:
1) is not an authorised co-ownership scheme
2) is an AIF, as defined by regulation 3 of the Alternative Investment Fund Managers Regulations 2013 (SI 2013/1773)
3) meets the conditions set out in section 261E (2) and (3) of the Financial Services and Markets Act 2000 (participation limited to professional or large investors), and
It must also meet the conditions in Regulation 5 (2) of SI 2025/200, namely:
1) The scheme must be UK-based
2) The scheme must meet the ownership requirement, and
3) The scheme must meet the restriction requirement.
UK based
Regulation 6 notes that a scheme is UK-based, if:
1) the operator and depositary of the scheme are bodies corporate incorporated in the United Kingdom,
2) the operator and depositary of the scheme both have a place of business in the United Kingdom from where they administer the co-ownership scheme, and
3) the deed setting out the arrangements which constitute the scheme is made under and governed by the law of England and Wales, Scotland or Northern Ireland and contains a statement to that effect.
Ownership requirement
This requirement is met at any time where the scheme meets either the genuine diversity of ownership requirement in regulation 7, or the non-close condition in regulation 8.
Restriction Requirement
Regulation 10 (1) notes that the restriction requirement is met when it meets one or more of the restriction conditions, which are:
1) the non-UK property assets condition (regulation 11)
2) the UK property rich condition (regulation 12)
3) the exempt investor condition (regulation 14)
Umbrella RIFs
RIFs can be structured as umbrella co-ownership schemes, containing sub-schemes which relate to separate pools of property.
Becoming a RIF
A co-ownership scheme becomes a RIF when it meets, or is treated as meeting, the qualifying conditions on the date specified in an “entry notice” issued by HMRC to the operator of a co-ownership scheme.
Ceasing to be a RIF
When a RIF ceases to meet one or more of the qualifying conditions, it ceases to be a RIF from the beginning of the first day on which the condition or conditions are no longer met. The operator of the RIF must notify HMRC when this happens.
HMRC can also issue cessation notices in certain circumstances (detailed in regulation 24 of SI 2025/200), which will state the date that the scheme is no longer a RIF.
Further information
Further information on RIFs can be found in the Investment Funds Manual.