Property Authorised Investment Funds

A Property Authorised Investment Fund (Property AIF) is an open-ended investment company (PDF 33K) which is a form of authorised investment fund (PDF 33K). Its investment portfolio comprises predominantly one or more of:

• real property (commercial and residential)
• shares in UK Real Estate Investment Trusts (UK- REITs)
• shares in certain foreign entities equivalent to UK-REITs

A Property AIF is exempt from corporation tax on a pool of income and gains arising from investment in the type of property assets listed above.

The investors in a Property AIF will then receive the income arising to the tax-exempt pool as a Property Income Distribution (PID) which is treated for the investor’s tax in the same way as the profits of a UK property business.

Investors may also receive two other types of income from a Property AIF:

• PAIF distribution (interest) – treated by the investor as a payment of interest
• PAIF distribution (dividends) – treated by the investor as a UK dividend (and which carries the same tax credit as other dividends)

All individual investors will receive a PID and a PAIF distribution (interest) after deduction of basic rate income tax. Some other categories of investor are entitled to receive payment without deduction of tax

For full guidance on the taxation of Property AIFs and their investors see the company tax manual from CTM48800 onwards.