The government has published further regulations on REITs in respect of taxation and investors. The four regulations cover:
- the consequences of breaching conditions set out in Part 4 of the Finance Act 2006;
- the information to be provided in financial statements that must be submitted by the principal company of a group REIT to HM Revenue & Customs;
- application of Part 4 of the Act to joint ventures in which the REIT is involved; and
- administrative provisions relating to the deduction and accounting for tax when REITS pay its tax-exempt profits as distributions to shareholders.
The regulations now provide for an additional tax charge on a REIT for companies that hold an interest of 10% or more in the REIT. This modifies the June draft regulations, which provided that a tax charge would apply only to a legal person, including an individual or a pension scheme, holding an interest of 10% or more in the REIT. As a consequence, changes to the rules on residential property held by investment-regulated pension schemes, including self-invested personal pension schemes (SIPPs), will be made to ensure that, from 1 January 2007, the rules set out in Schedule 29A to the Finance Act 2004 will apply equally to a pension scheme holding an interest in a REIT.
View the latest regulations:
SI 2006/2864 – The Real Estate Investment Trusts (Breach of Conditions) Regulations 2006
SI 2006/2866 – The Real Estate Investment Trusts (Joint Ventures) Regulations 2006
SI 2006/2867 – The Real Estate Investment Trusts (Assessment and Recovery of Tax) Regulations 2006
References: EGi Legal News 07/11/06
