PAIF meaning

The tax regime applicable to property authorised investment funds (PAIFs) applies to UK open-ended investment companies (OEICs) which: meet a number of prescribed conditions, and have notified HMRC in advance that they wish the PAIF regime to apply to them This Practice Note concentrates on the criteria that must be satisfied for the PAIF rules to apply to an OEIC in practice. As a starting point, for a top-level overview of the PAIF tax regime in its entirety, see Practice Note: Taxation of property funds—overview. Further important elements of the framework are considered in the Practice Notes: PAIFs—tax treatment of the fund and its investors and PAIFs—breaches and exit. There is significant overlap between the PAIF tax rules and the UK tax regime for real estate investment trusts (REITs) in many areas. This reflects their complementary design: the PAIF regime is tailored to open-ended vehicles investing in real estate, while the REIT regime is aimed at closed-ended vehicles with a similar purpose....

Tax elected fund (TEF) A ‘tax elected fund’ (TEF) is an authorised investment fund (AIF) that has obtained TEF status by applying successfully to HMRC. Mirroring the PAIF framework (available to certain AIFs that hold property), a dedicated set of tax rules for TEFs aims to shift the incidence of taxation from the fund vehicle to the investor in practice. Consequently, TEF investors are taxed as if they had owned the underlying assets outright themselves. Apart from particular provisions found in the TEF rules, TEFs otherwise remain subject to the tax treatment that generally applies to AIFs in general terms. Brought in during 2009, the TEF regime sought to enhance the tax efficiency of funds investing in a mixed portfolio of assets—this is achieved as the TEF structure allows different categories of income to be streamed to investors in effect. The TEF approach is not appropriate for funds that derive income directly from a property business (UK or overseas), for which the PAIF regime may instead be used where...

FORTHCOMING CHANGE relating to income tax rates applicable to dividends : As set out at Budget 2025, Finance Bill 2026 introduces provisions that will raise the income tax rates applying to dividend income from 6 April 2026. The dividend ordinary rate (covering dividend income that would otherwise be taxed at the basic rate) and the dividend upper rate (covering dividend income that would otherwise be taxed at the higher rate) will each increase by two percentage points, to 10.75% and 35.75%, respectively. The dividend additional rate (relating to dividend income that would otherwise be charged at the additional rate) will remain the same at 39.35%...