The rate of corporation tax, at the time this guide was produced in July 2013, was 20 per cent.
Corporation tax is an irrecoverable cost to certain tax-exempt investors such as non-corporate pension funds, charities, Isas or Sipps.
As a result, Philip Nell, manager of the Aviva Investors Property Trust, said it was becoming increasingly popular among fund groups to convert to a Property Authorised Investment fund (PAIF) structure.
Inside the PAIF structure, net property income (or rental income) and interest distributions can be received by eligible investors without the deduction of tax.
Instead, the distributions are taxed in the hands of the investors based on their own specific tax situation.
This removes the 20 per cent corporate tax charge that currently reduces returns to the range of exempt investors mentioned above.
Conversion into PAIFs brings unit trusts and Oeics in line with real estate investment trusts which have a similar tax advantage compared to normal quoted property companies (most of which have now converted).
However, Guy Glover, manager of the F&C UK Property fund, said individual investors must take their own tax advice as to which vehicles are more efficient from a tax perspective for them.
