The Income Tax (Definition of Unit Trust Scheme) Regulations 1988
These Regulations provide for certain unauthorised unit trust schemes to be excepted from the treatment of such schemes given by section 354A of the Income and Corporation Taxes Act 1970 (“section 354A”). This section, which was inserted by section 39(1) of the Finance Act 1987, treats income arising to the trustees of unauthorised unit trust schemes as being income of the trustees and not of the unit holders for income tax purposes and treats any capital allowances due in respect of trust expenditure as being available to the trustees and not to the unit holders. Four types of unit trust scheme are excepted from section 354A by these Regulations: enterprise zone property schemes, charitable unit trust schemes, limited partnership schemes and approved profit sharing schemes. In the first three cases the treatment of the trustees and unit holders for the purposes of income tax and capital allowances will accord with the legal nature of the relationship between them, as established by the terms of the scheme. Approved profit sharing schemes will be taxed in accordance with Chapter III of the Finance Act 1978.