A regulated investment structure has been launched in the UK that could save charities up to £12 million (€13.2 million) a year in tax.
Charity Authorised Investment Funds (Caifs) are the result of several bodies working with the Financial Conduct Authority (FCA) and they have created a structure that mirrors an existing unauthorised charity fund vehicle, the Common Investment Fund.
The Investment Association (IA), a UK trade body, says charities are “set to reap millions of pounds in tax benefits” and enjoy full FCA regulation on their investments.
As well as the IA, a working group included the Charity Investors Group and the Charity Law Association in the structure’s design.
Like the Common Investment Funds, which have assets of £12.3 billion according to an estimate, the Caif can smooth income levels over multiple years.
The new, authorised funds would classify the majority of charity investors as retail investors.
They have more flexibility on distributing income than ordinary authorised funds and the ability to have an independent advisory committee to represent unitholder interests.
Peter Capper, the IA’s fund and investment risk specialist, said: “This new structure combines clear tax efficiencies and full regulatory protection in a tailor-made product suited to the asset management industry’s clients in the charity sector, which clearly need every advantage they can get in order to deliver for good causes.”
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