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HMRC internal manual

Savings and Investment Manual

Dividends and other company distributions: UK Real Estate Investment Trusts: tax returns

Completion of tax returns

For individuals who do receive tax returns, the PID from a UK-REIT is included as other income. The net amount of cash received (£80 in the example at GREIT08515 SAIM20000) is shown in box 13.1. The amount of tax shown as deducted on the voucher is shown in box 13.2 (£20 in the example) and the total amount of the PID (£100 in the above example) is included in box 13.3.

Any normal dividend paid by the UK-REIT is included as a dividend from a UK company in boxes 10.15 to 10.17, in the usual way.

Although chargeable to tax as property income, the PID should not be shown on the Property Pages. Investors in a UK-REIT do not therefore need to obtain and complete Property Pages if they have no income from property apart from the PID. Note that losses on other property business, such as buy-to-let, can not be off-set against the PID.

Note that shares in a UK REIT are treated in exactly the same way as shares in any other UK company for capital gains tax purposes. Broadly gains on disposal after taper relief are chargeable to tax at the investor’s marginal rate (20% or 40%). If the proceeds of disposal of UK-REIT shares and any other chargeable assets is less than £34,000 and the total gain after taper relief but before the annual exempt amount is less than £8,500, there is no need to complete the Capital Gains pages of the SA return.

Tax withheld from PIDs - treatment for ITSA payments on accountUnder the Income Tax Self Assessment (ITSA) regime, most taxpayers are required to make two payments on account (POA) towards the income tax due for any year, and a balancing payment to meet any shortfall at the annual return filing date. Each POA is half the income tax liability for the previous year, reduced to give credit for any tax deducted at source. No POAs are required from:

  • Those whose income tax bill for the previous year was less than £500, or
  • Those who had more than 80% of the income tax due for the previous year deducted at source.

So any PID received should be added to any other income due to be reported on a return. The tax withheld will then be used to calculate whether the second requirement above is met. If it is, then no POAs will be required to be made to cover tax due for the following year.