UK real estate investment trusts (REITs)—summary
Produced in partnership with Charles Goddard of Rosetta Tax
UK real estate investment trusts (REITs)—summary

The following Tax practice note Produced in partnership with Charles Goddard of Rosetta Tax provides comprehensive and up to date legal information covering:

  • UK real estate investment trusts (REITs)—summary
  • Background to the regime
  • Form of a UK REIT
  • The conditions
  • Breaching the conditions and failing the tests
  • Operation of the regime—the ring fence
  • Property rental business
  • Tax treatment of the UK REIT
  • Taxation of shareholders—distributions
  • Taxation of shareholders—withholding tax
  • More...

The regime for UK real estate investment trusts (UK REITs, or just REITs) was introduced on 1 January 2007.

There are currently around 50 UK REITs, many of which converted into REITs when the regime was introduced. The original UK REITs have been joined by a number of additional entrants to the regime as a result of changes to the entry rules, including, in particular:

  1. the abolition of the entry charge

  2. the relaxation of the requirement for the listing of a company, so that companies without a listing but which are admitted to trading (and actually traded) on a recognised stock exchange (including, for example, on markets such as AIM) can also qualify, and

  3. the changes to the rules to allow UK REITs to invest in other REITs

These developments have meant that the number of UK REITs has increased further. According to the British Property Federation (BPF), 'more than 80% of the listed property companies (by value) that could convert to REIT status have done so'.

Further changes in the rules for UK REITs occurred in 2014, which also had a beneficial effect. UK REITs and their non-UK equivalents now qualify as institutional investors allowing further flexibility for UK REITs and their investors, including a UK REIT as a form of joint venture vehicle for other REITs. In addition, regular costs of hedging can now be

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