UK Real Estate Investment Trusts (REITs)

An anti-avoidance measure that will have effect from April 2009 to prevent companies qualifying as a REIT where properties are owner occupied.

Baker Tilly view

There has been considerable interest in using the REIT regime to enhance shareholder value by separating property ownership from the operational activities. This does not appear to be in line with policy and the REIT regime is being tightened to prevent such structures.

In detail

The Finance Bill 2009 will contain amendments to the REIT regime taking effect for accounting periods beginning on or after 1 April 2009.

The changes will exclude all owner occupied properties from the category of tax exempt business. Changes will also be made to the balance of business tests so that they are applied to more companies in the group.