Taxes Consolidation Act 1997 section 739

Taxation of unit holders in undertakings for collective investment

Section 739 sets out the taxation regime for investors (as distinct from the entities themselves) in authorised unit trusts, UCITS and designated investment companies, complementing section 738 which taxes the entities.

• Payments from an undertaking for collective investment to an individual unit holder are tax-free; payments to a corporate unit holder are liable to corporation tax, with the income grossed up at 30% and a credit given for the notional income tax deducted
• Where a company holds units in the course of a financial trade, the investment return is regrossed at 30% and charged under Case I of Schedule D, with credit for the tax treated as deducted
• Capital gains on disposals of units by individuals are exempt where the units were acquired on or after 6 April 1994; corporate gains are regrossed at 30% before inclusion in the corporation tax computation
• Where units were acquired under no-gain/no-loss circumstances, the previous owner's acquisition date and cost are inherited; undertakings that commenced business after 25 May 1993 are outside the transitional rules