REIT Information

Shaftesbury PLC is a Real estate Investment Trust or REIT. It converted to REIT status on 1 April 2007.

REITS are tax-exempt, listed property investment companies which are not liable to pay corporation tax on their rental income or capital gains on qualifying activites, providing certain conditions are met.

This regime was introduced with effect from 1 January 2007 though similar regimes exist in other countries including the USA and Australia.

Companies which meet the conditions for conversion may elect to convert to REIT status and pay a 2% conversion charge to HMRC based on the market value of its investment properties on the date of conversion. To qualify, companies must meet a number of conditions including minimum levels of interest cover and the proportion of total profits and assets that relate to their property rental business.  Companies are required to distribute to shareholders at least 90% of the profits arising from tax-exempt business as Property Income Distributions (PIDs).

Although REITs do not pay corporation tax on profits and gains from UK qualifying rental business, they remain liable to corporation tax on non-property investment business including rent or profits on the sale of trading properties.

Property Income Distributions (PIDs)
The tax exempt profits that are required to be distributed are not necessarily a company’s accounting profits. HMRC requires various adjustments to be made including tax deductible allowances on qualifying capital spend.

Tax Consequences
Dividends are paid as Property Income Distributions or PIDs. PIDs are taxable as property letting income (for shareholders who are not tax exempt) but will be treated separately from any other property letting business which they may carry on.

PID dividend payments will be paid after deduction of withholding tax at basic rate (20% for 2010/2011 and 2011/2012) which the REIT pays  to HMRC on behalf of the shareholder.

Certain categories of shareholders may be able to claim exemption from deduction of withholding tax and receive their dividends gross. Categories include:

• UK companies
• Charities
• Local authorities
• UK Pension Schemes
• Manages of PEPs, ISAs and Child Trust Funds

To claim an exemption, shareholders should complete one of the forms below and return it to the Company’s registrars who are:

Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA

Beneficial owner form Intermediary form 

Other shareholders resident outside the UK may also be able to claim a refund (either as an individual or as a company) from HMRC subject to the terms of a double tax treaty, if any, between the UK and the country in which they are resident.

The above information and summary of tax consequences is only a guide. It is not comprehensive nor of sufficient detail for decisions to be based on it and should not replace professional advice. Shaftesbury PLC accepts no responsibility for any loss arising from action taken or not taken by any person or entity using this information.