The TM Hearthstone UK Residential Property Fund is constructed as a UK domiciled Open Ended Investment Company (OEIC) with Property Authorised Investment Fund (PAIF) tax status. As a PAIF, all of the Fund’s income from property investment is exempt from corporation tax, which would normally be payable by an OEIC at 20%.
As a result, the PAIF is very efficient for tax purposes, and the investor is taxed upon the PAIF assets more or less as if they held those assets directly. This is particularly relevant for those investors holding the Fund within tax advantage wrappers such as SIPP, ISA or Offshore Bond.
A feeder fund option is also available which is structured as a UK Authorised Unit Trust. Whilst this can also be held within SIPP, ISA and Offshore Bond, it does not offer the same corporation tax exemption enjoyed by PAIFs. The feeder fund structure is used by some of the online fund supermarkets an investment platforms which cannot currently administer PAIFs.
Information above is based on Hearthstone’s understanding of legislation in force as at January 2015. Legislation may change, and tax and trust law may be open to differing interpretation.
The impact of taxation will depend on individual circumstances.
Hearthstone strongly recommends that potential investors seek advice from their financial adviser or tax specialist before using the TM Hearthstone UK Residential Property Fund within any of the tax planning ideas set out on this website.