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Why do PAIFs often have an associated
feeder fund?
A feeder fund linked to a PAIF, whilst not subject to the same
tax rules, can provide investors with an efcient means to obtain
exposure to the performance of the PAIF. Feeder funds are
often established for PAIFs because certain investors are either
ineligible, or unable to invest in the PAIF. For example, HMRC rules
prevent any Body Corporate from owning 10% or more of a PAIF
directly, whilst many Platforms are still operationally unable
to process streamed income payments for their clients.
Eligible corporate
investors (<10%)
Threadneedle
UK Property Authorised
Trust
(“Threadneedle Feeder Fund”)
Threadneedle
UK Property Authorised
Investment Fund
(“Threadneedle PAIF”)
Taxable & tax
exempt investors
Income paid as a single dividend
distribution
Income paid in one payment, split
into three streams, which can be
treated separately for
UK tax purposes.
Property
income
Interest
Dividend
Dividend
Eligible corporate
investors (>10%)
Taxable investors
Who benets from the PAIF structure?
Tax exempt investors, including individuals holding their
investment in an ISA or in a SIPP, will benet from the PAIF
structure. This is because both property income and interest
income can be paid gross of tax. All things being equal, tax
exempt investors can expect to receive an uplift of 25% in
investment income compared to an authorised property unit trust.
Higher and additional rate taxpayers who currently hold units in
an authorised property unit trust outside of a tax wrapper such
as an ISA or SIPP may benet from holding units in the Feeder
Fund rather than shares in the PAIF structure, from 6 April 2016,
if their dividend income, including the dividend income from
the Feeder Fund, received in a tax year is less than the £5,000
dividend allowance.
Threadneedle PAIF
Columbia Threadneedle Investments converted the Threadneedle
UK Property Trust (the Trust) into the Threadneedle UK Property
Authorised Investment Fund (the ‘Threadneedle PAIF’), a newly-
formed Open-Ended Investment Company on 14 May 2016.
To nd out more visit columbiathreadneedle.com
Important information. For internal use and for Professional and/or Qualied Investors only (not to be used with or passed on to retail clients). Past performance is not a guide to future performance. The value of investments and any
income is not guaranteed and can go down as well as up and may be affected by exchange rate uctuations. This means that an investor may not get back the amount invested. This document is not investment, legal, tax, or accounting advice.
Investors should consult with their own professional advisors for advice on any investment, legal, tax, or accounting issues relating an investment with Columbia Threadneedle Investments. The research and analysis included in this document
has been produced by Columbia Threadneedle Investments for its own investment management activities, may have been acted upon prior to publication and is made available here incidentally. Any opinions expressed are made as at the
date of publication but are subject to change without notice. Information obtained from external sources is believed to be reliable but its accuracy or completeness cannot be guaranteed. Issued by Threadneedle Asset Management Limited.
Registered in England and Wales, No. 573204. Registered Ofce: Cannon Place, 78 Cannon Street, London EC4N 6AG. Authorised and regulated in the UK by the Financial Conduct Authority. Columbia Threadneedle Investments is a brand name
and both the Threadneedle Investments name and logo are trademarks or registered trademarks of the Threadneedle group of companies. columbiathreadneedle.com Issued 06.17 I Valid to 06.18 | J26633