UK REITs—taxation of the REIT and shareholders
Produced in partnership with Martin Shah of Simmons & Simmons and Charles Goddard of Rosetta Tax

The following Tax practice note produced in partnership with Martin Shah of Simmons & Simmons and Charles Goddard of Rosetta Tax provides comprehensive and up to date legal information covering:

  • UK REITs—taxation of the REIT and shareholders
  • Effect of entry to the regime
  • Entry before 17 July 2012—entry charge
  • Operation of the UK REIT regime—the principles underpinning the regime
  • Tax treatment of the UK REIT
  • Income profits
  • Calculation of profits
  • Loan relationships and derivative contracts
  • Capital allowances
  • Capital gains
  • More...

UK REITs—taxation of the REIT and shareholders

FORTHCOMING CHANGE: Finance Bill 2022 will amend the real estate investment trust (REIT) regime. The amendments aim to reduce administrative burden and unnecessary costs for certain REITs and to increase the attractiveness of the regime. The changes amend:

  1. the listing requirement

  2. the definition of an overseas equivalent of a UK REIT

  3. the holders of excessive rights rule, and

  4. the balance of business test

This follows a review of the UK funds regime and in particular, a consultation on the tax treatment of asset holding companies.

The government also consulted until 20 April 2021 on the UK funds regime more generally and sought views on REITs and:

  1. the interest cover test and the corporate interest restriction

  2. the three-year development rule

  3. the three property rule, and

  4. the overseas property rules

See: Finance Bill 2022 policy paper, draft legislation and explanatory notes, Taxation of asset holding companies in alternative fund structures (second stage consultation), Review of the UK funds regime: a call for input and News Analyses: Legislation Day: Draft Finance Bill 2022—Tax analysis—Real estate investment trusts (REITs)—amendments and Promoting UK funds—potential reform of the UK REIT regime.

This Practice Note examines the tax treatment of UK real estate investment trusts (UK REITs) and their shareholders.

The purpose of the UK REIT regime is to provide a tax-efficient vehicle designed to allow investment into the UK real

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