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HMRC internal manual

Guidance on Real Estate Investment Trusts

HM Revenue & Customs
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Distributions: administration by UK-REIT


When the company makes distributions or other payments that are treated as distributions for tax purposes, they can be treated in two ways.

To the extent the distributions represent distributions of profits of the tax-exempt business, they are in general payable under deduction of tax at the basic rate (20%) (section 122 and paragraph 4 Schedule 17 FA 2006). The guidance refers to this kind of distribution as a ‘property income distribution’ or PID (although the legislation does not use this term or abbreviation, and the regulations refer to them as ‘relevant distributions’).

The company is required to account quarterly to HMRC for tax deducted from PID. In some circumstances, PID can be paid gross. The company must provide recipients of PID with certificates showing the amount of tax deducted from their PID.

The detailed administrative arrangements regarding gross/ net payments, accounting for the tax etc are set out in regulations (SI 2006/2867), and are discussed in more detail in GREIT08115 onwards.

All other payments made by the company are treated according to the normal rules for company distributions in Part VI ICTA and Part 9A CTA 2009. See Company Taxation Manual for guidance.

Group REITs and subsidiaries

The PID rules that apply to a single company UK-REIT apply also to the principal company of Group REIT.

The PID rules do not apply to distributions made by other members of a Group REIT, by subsidiaries of the group where the interest is less than 75% and by joint venture companies in which a single company UK-REIT has shares . The distributions made by these companies are never treated as PID, and they are all dealt with under the normal rules for company distributions in Part VI ICTA and Part 9A CTA 2009.

Former UK-REITs

The obligation to pay PIDs and to make returns of payments (including the reconciliation) of PID for a company that was a UK-REIT, or a company that was the principal company of a Group REIT continues so long as there are distributable reserves attributable to profits from the tax-exempt business carried on while Part 4 of FA 2006 applied to them.