Introduction Background Note
24.Real Estate Investment Trusts were introduced with effect from 1 January 2007. The rules for the regime are contained in part 4 of the Finance Act 2006 and in regulations.
25.Companies and groups of companies whose main business is the rental of property can elect to become Real Estate Investment Trusts (REITs), subject to meeting certain conditions relating to the REIT itself, the properties being rented and the business of the REIT.
26.A REIT has to distribute 90 per cent of the profits from its property rental business as distributions to shareholders. There is also a charge on entering the REIT regime.
27.A REIT is exempt from UK tax on income and gains of its property rental business but pays tax on the profits and gains from other activities.
28.The changes announced in the section and Schedule will:
	prevent (in certain circumstances specified by regulations) companies from restructuring with the aim of meeting the REIT requirements and conditions. The amendment will not apply to restructuring where control of non qualifying activities is severed to result in the property rental business qualifying as a REIT;
	remove a barrier to entry for businesses with ‘tied premises’;
	allow the charge incurred for breaching the limit of the profit finance cost ratio to be waived in certain circumstances; and
	clarify and make consistent parts of the existing legislation.