BECOMING A UK-REIT 32
APPENDIX B: CONDITIONS REQUIRED TO BECOME AND REMAIN A UK-REIT (WITHOUT BREACHES)
PARENT COMPANY CONDITIONS
X Tax resident only in the UK X Not an open-ended investment company X Not a close company (although three year grace period and holdings by certain institutions ignored) X Shares admitted to trading on a recognised stock exchange (with exception for qualifying institutional investors) X Only one class of ordinary shares in issue, with the only other permitted share class being non-voting restricted preference shares X No non-commercial loans. X Worldwide group must have at least three properties (a property is a unit that is designed for separate letting) X No one property can exceed in value 40% of the total value of the properties involved in the property rental business X At least 75% of worldwide profits of the group must derive from the property rental business X At least 75% of the worldwide gross assets of the group must comprise assets or cash involved in the property rental business. For accounting periods commencing on or after 1 April 2022, where a group meets the 80% profits and assets ratio in its group accounts, it may not be necessary to file tax statements to demonstrate the 75% tests have been met. X The parent company of the UK-REIT group must distribute at least 90% of net rental profits of UK companies and non-UK companies to the extent that they derive from UK property (as calculated for tax purposes) within 12 months of the end of each period of account. Gains are not required to be distributed X A UK-REIT which invests in another UK-REIT is required to distribute 100% of the property income distributions received by the parent company of the group to its shareholders X The profit deriving from the UK property rental business (as calculated for tax purposes) must be at least 1.25 times the interest on borrowings payable in respect of that business. X Apply if a distribution is paid to a corporate shareholder with an interest of 10% or more in the UK-REIT unless (fromApril 2022) a shareholder is entitled to receive PIDs gross
BUSINESS CONDITIONS
OTHER CONDITIONS
TAX PENALTIES
X May apply if distribution condition is not met X May apply if profit: financing cost ratio is not met.
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