BECOMING A UK-REIT 05
2. WHAT IS A UK-REIT?
A UK-REIT is a listed company, or group of companies, whose principal activity is the ownership and management of a real estate portfolio to generate rental income and capital gains for shareholders. UK-REITs are distinguished from other UK property investment companies only by their tax status.
Companies within the UK-REIT regime are exempt from UK corporation tax on rental profits and capital gains deriving from their UK property rental business. In return, the UK‑REIT must distribute, within 12 months of each accounting period, 90% of its net property rental income to investors. Such distributions are treated as property income in the hands of shareholders and are generally termed ‘property income distributions’ (‘PIDs’). The effect of this tax treatment is that shareholders obtain broadly similar tax treatment to holding properties directly. Conditions for becoming a UK-REIT In addition to the distribution requirement outlined above, there are a number of other conditions that a UK-REIT must satisfy in order to join, or remain within, the UK-REIT regime. A summary of these is included in Appendix B.
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