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HM 41: Options for calculation and payment of tax
or “How to calculate and pay tax as a multi-rate PIE”
You could also call this:

“How multi-rate PIEs calculate and pay tax for exiting and remaining investors”

When you’re part of a multi-rate PIE (a type of investment), the PIE can choose to figure out how much tax it needs to pay for investors who leave during the year and those who stay. If the PIE decides to do this, it needs to tell the tax office about its choice and when it will work out the tax.

For investors who leave during the year, the PIE will work out the tax they need to pay for the time they were invested. This is done using special rules that say when someone is considered to have left and for what time period.

For investors who stay and for times when no one is leaving, the PIE will work out the tax in a different way.

The PIE has to pay the tax office:

  • The tax for people who left, within a month after they left. But if they left in November, the PIE has until 15 January to pay.
  • The rest of the tax for the whole year, for people still invested at the end of the year. This needs to be paid within a month after the tax year ends.

The PIE doesn’t have to pay tax in instalments throughout the year like some other businesses do.

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Next up: HM 42B: Part-year tax calculations for PIEs under the exit calculation option for the 2010–11 tax year

or “How PIEs calculate tax in two parts for the 2010-11 tax year”
Next

Part H Taxation of certain entities
Portfolio investment entities: Calculating and paying tax liability

HM 42Exit calculation option

  1. This section applies when a multi-rate PIE chooses for a tax year to calculate its income tax liability for exiting investors and remaining investors. The PIE must notify the Commissioner under section 31B of the Tax Administration Act 1994 of the calculation option and of the applicable attribution period.

  2. For an investor whose interest has reached the exit level during the tax year, the PIE must calculate its income tax liability under section HM 47 for the investor and the relevant exit period. The exit level and exit periods are determined under sections HM 62 and HM 63.

  3. For investors and periods in the income year other than exit periods, the PIE must calculate its income tax liability under section HM 47 for the relevant period.

  4. The PIE must pay to the Commissioner—

  5. the amount of income tax liability for an exiting investor for the exit period—
    1. within 1 month after the end of the month of withdrawal; or
      1. if the month of withdrawal is November, by the following 15 January; and
      2. the rest of the PIE's income tax liability for the tax year within 1 month after the end of the tax year for remaining investors in the PIE at the end of the tax year, after allowing for any payment under paragraph (a) or any voluntary payment under section HM 45.

        1. The PIE is not required to pay provisional tax under subpart RC (Provisional tax) for the tax year.

        Compare
        • s HL 24(1)–(4)
        Notes
        • Section HM 42: inserted, on (applying for the 2010–11 and later income years), by section 292(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
        • Section HM 42(1): replaced, on (with effect on 1 April 2010), by section 128(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
        • Section HM 42 list of defined terms attribution period: inserted, on (with effect on 1 April 2010), by section 128(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
        • Section HM 42 list of defined terms notify: inserted, on , by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).