Revenue Note for Guidance

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Revenue Note for Guidance


Real Estate Investment Trusts


This Part, in sections 705A to 705Q, provides for the introduction of a tax regime for Real Estate Investment Trust (REIT) companies.

REITs are listed companies, used as collective investment vehicles to invest in rental property assets. They are exempt from tax on qualifying rental income and gains within the REIT, subject to a requirement to distribute profits annually for taxation at the level of the investors. This distribution is subject to Dividend Withholding Tax (DWT) at the standard rate of income tax.

By removing this double layer of taxation, investors will get broadly the same after-tax return from a REIT investment as if they had invested directly in property.

705A Interpretation and application


This section is an interpretation section for terms used in this Part. It sets out the application of Part 25A.


Main definitions

“group Real Estate Investment Trust” and references to “group REIT”, means a group electing to be a group REIT by the principal company of the group giving a notice under section 705E and both the principal company and the group comply with the conditions in section 705B.

“property income” is the property profits of the REIT or group REIT, reduced by the property net gains or increased by the property net losses.

“property income dividend” is a dividend paid by a REIT or group REIT from its property income.

“property profits” of a REIT or group REIT is the portion of the aggregate profits which is referable to the property rental business only. The portion of the aggregate profits which is referable to the residual business (if any) is disregarded.

“property rental business” means the business of a REIT or group REIT whose only purpose is to generate rental income. All such businesses in a group REIT are treated as a single business.

“qualifying investor” is an investment undertaking as defined in section 739B(1), a pension scheme, a company carrying on life business, a charity or the National Asset Management Agency.

“Real Estate Investment Trust” and references to “REIT”, means a company which elects to be a REIT by giving a notice to Revenue under section 705E and complies with the conditions in section 705B.

“residual business” is business carried on by a REIT or group REIT which is not property rental business.

“specified accounting period” is the accounting period in which the company or principal company gives a notice under section 705E.

“specified debt” means any debt which a REIT or group REIT incurs in relation to money borrowed by or advanced to the REIT or group REIT.

Relevant Date: Finance Act 2020