CTM48115 - Authorised investment funds: collective investment schemes: general: authorised investment funds

Authorised investment funds (AIFs) are collective investment schemes authorised and regulated by the Financial Services Authority (FSA) under the terms of the Financial Services and Markets Act 2000 (FSMA00).

The rules dealing with the constitution and investment powers of AIFs are set out in the ‘COLL’ handbook published by the FSA. This can be found at the FSA website at www.fsa.gov.uk.


All AIFs (whichever legal form they take - see AIFs - legal forms, below) fall into one of three categories defined by the FSA.

  • UCITS funds
UCITS funds are AIFs that are within the terms of the European directive for undertakings for collective investments in transferable securities (UCITS). In accordance with the FSA ‘COLL’ handbook the instrument constituting the scheme must state that the scheme is a UCITS scheme. These schemes can be marketed to retail investors within any European Union member state.
  • Non-UCITS retail funds
Non - UCITS retail funds (often referred to as NURS funds) are any AIFs which, whilst not being UCITS schemes are not Qualified Investor Schemes. Their investment powers are less restricted than UCITS schemes. They can be marketed to retail investors.
  • Qualified Investor Schemes (QIS)
QIS funds are AIFs with wider investment and borrowing powers than either UCITS funds or NURS funds and can be marketed only to ‘qualified’ investors as defined by the FSA within the COLL handbook. More details can be found at CTM48700 onwards.

Nearly all AIFs are taxed in the same way and CTM48200 to CTM48760 gives details of the tax rules which apply to most AIF schemes. However, for the tax treatment of Property AIFs refer to CTM48800 to CTM48882.

In general the tax rules applying to investors (called ‘participants’ in the regulations) in each type of AIF are the same (see CTM48500 onwards for CT payers and CTM48550 onwards for IT payers) but there are exceptions for certain investors in a QIS. Details of the class of investors affected and the special tax rules that apply to them can be found at CTM48700 onwards.

Legal forms

AIFs can have two different legal forms:

  • Authorised Unit Trusts (AUTs) (CTM48120), and
  • Open-ended Investment Companies (OEICs) (CTM48125).

Note that both the FSA handbook and the tax rules use ‘units’ (in an AIF) to refer to either units in an AUT or shares in an OEIC as the case may be.