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Tuesday, 28 June 2011 18:14

The UK-REIT regime was introduced in early 2007 and allows for tax-exempt, listed property investment companies that are not liable for Corporation Tax on rental income or capital gains on qualifying activities (providing certain conditions are met). 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 have a minimum level of interest cover and acceptable proportion of total profits and assets relative to rentals; and are required to distribute at least 90% of profits from tax-exempt business as Property Income Distributions (PIDs) to shareholders. 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. 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. 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 must be paid after the deduction of Withholding Tax at the basic 20% rate (2012) which the REIT must pay directly to HMRC on behalf of the shareholder. UK companies, charities, local authorities, UK pension schemes, PEPs, ISAs and Child Trust Funds are able to claim exemption from deduction of the withholding tax and receive their dividends gross. 





Care Homes: As the UK population ages, the number of people aged 85 and over is expected to double over the next 20 years, and on average about 15% of this population will require residential care, so as a consequence there will be an increased need for care homes, but there are only around 140 new care homes being registered each year even though, according to BUPA around 81k beds could be lost over the next 10 years due to older care homes closing & other factors.


According to the Housing Learning and Improving Network (2011), just 1% of Britons aged 60+ live in retirement accommodation compared with 17% in the US and 13% in Australia & New Zealand, so the demand for retirement homes looks set for big growth given the demographic “explosion of grey hair” which will see the number of over 65s rise by 50% by 2030. As in many other areas “the world had passed the UK by” in terms of retirement villages, as there are only 500,000 sheltered housing units (mostly provided by Housing Associations), mainly because developers prefer to sell units rather build retirement villages with external operators.


DOWNLOAD - BDO 2012 UK-REIT Survey : - Link


Last Updated on Wednesday, 27 August 2014 08:32