Sharon Ayres
Partner
Article
6
A significant relaxation of the UK REIT rules comes into force from 1st April 2022. These changes will be of particular benefit to institutional investors (such as pension schemes, insurance companies and limited partnerships that are collective investment schemes).
This relaxation means that a UK-REIT could become the investment vehicle of choice for institutional investors.
A UK REIT is a UK company limited by shares (or a group of such companies) which invests in real estate assets and carries on a property rental business. A company obtains its UK REIT status by meeting the relevant conditions, and maintains that status by continuing to satisfy those conditions. The conditions are set out in Part 12 of the Corporation Tax Act 2010.
The company becomes a UK-REIT once it enters the REIT regime. It enters this regime by giving the appropriate notice to HM Revenue & Customs. The notice must confirm that the 'gateway' conditions for REIT status have been met, and the other conditions will be satisfied in the company's first accounting period in the UK-REIT regime.
The benefits are considerable:
These amendments make the UK-REIT significantly more attractive as a tax-efficient 'club' or joint venture vehicle which will enhance investment in relevant real estate assets and allow the UK vehicle to compete with other offshore options (such as Jersey property unit trusts).
In the event that the UK-REIT looks of interest, investors and fund managers will still need to consider carefully the other qualifying conditions and requirements that continue to apply (which are by no means simple). The changes are however are very welcome to see.
If you have any questions or are interested in learning more please contact Sharon Ayres, Lee Nuttall or your usual Gowling WLG contact.
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