Taxes Consolidation Act 1997 section 705J

Taxation of shareholders

Section 705J sets out the corporation tax treatment of property income dividends received by shareholders of a REIT or group REIT, including the applicable Schedule D Case and exemptions for intra-group distributions.

• Property income dividends paid by a REIT to corporate shareholders are chargeable to corporation tax under Case IV of Schedule D, unless an exception applies.
• A property income dividend paid by one member of a group REIT to another member of the same group REIT is exempt from corporation tax and is not taken into account in computing that company's income.
• A property income dividend received by a qualifying company within section 110 (a securitisation vehicle) is chargeable to corporation tax under Case III of Schedule D rather than Case IV.
• Where a company's investment income would otherwise be taxable under Case I of Schedule D (for example, a life assurance company), the property income dividend is taxed under Case I notwithstanding the general Case IV rule.