Explanatory note

These Regulations amend the Authorised Investment Funds (Tax) Regulations 2006 (S.I.2006/964) (“the principal Regulations”).

Regulation 48(2) of the principal Regulations provides that when a dividend distribution is made by an authorised investment fund to a participant chargeable to corporation tax, the unfranked part of the distribution is treated as an annual payment received by the participant after deduction of basic rate income tax. Paragraph (2A) of regulation 48 however provides that this treatment is not given to dividend distributions which are within the charge to corporation tax on trade profits.

Regulation 2 amends regulation 48(2A) of the principal Regulations, and corrects an inadvertent change made by the insertion of that paragraph, to provide that the effect of regulation 48(2) is preserved for dividend distributions which are received in respect of certain long-term life assurance business, referred to as non-BLAGAB long-term business, a term defined in section 66(5) of the Finance Act 2012 (c. 14).

A Tax Information and Impact Note has not been prepared for this Instrument as it contains no substantive changes to Tax Policy.