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Chapter IFM21005

Document Cited authorities 8 Cited in Related
Vincent
Published date05 July 2019
Record NumberIFM21005
CourtHM Revenue & Customs
IssuerHM Revenue & Customs

A Real Estate Investment Trust (REIT) is a vehicle that allows an investor to obtain broadly similar returns from their investment, as they would have, had they invested directly in property.

The REIT is a limited company, or group of companies, meeting various conditions, that elects into the REIT regime.

Whether the vehicle is a single company or a group, it is referred to in the legislation as a Real Estate Investment Trust. In this guidance, they are referred to as UK-REITs or Group REITs.

The REIT is required to invest mainly in property and to pay out 90% of the profits from its property rental business as measured for tax purposes (see IFM22050) as dividends to shareholders (referred to in this guidance as property income distributions).

The REIT is exempt from UK tax on the income and gains of its property rental business.

In the hands of the shareholder, property income distributions (PID) are taxable as profits of a UK property rental business. The PID is received net of withholding tax, unless it is to a recipient entitled to gross payment (see IFM28125)

The REIT is taxable in the normal way to CT on the profits and gains from any other activities. Distributions from these profits are ordinary dividends. Gains on disposal of shares in the REIT on or before 5 April 2019 are chargeable to tax under the normal rules for disposing of shares. From 6 April 2019 gains on disposal of shares in the REIT may be exempt (IFM25007)

For Group REITs the amount of income and gains of the qualifying property rental business of each member that are exempt from tax is restricted by reference to the percentage interest held by group members in that company. The remainder of the income and gains of the property rental business (which represents the proportion of the...

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