Hike in number of REITs breaching tax rules

The number of real estate investment trusts (REITs) in breach of the special tax-exempt regime has nearly quadrupled over the past year according to data obtained by international law firm BCLP from HMRC. The information revealed that 26 breaches of the REIT tax regime were notified to HMRC in 2023-24 up from seven the previous year.

Elizabeth Bradley partner at BCLP said: ‘The relaxation of the REIT tax regime has encouraged more eligible investors to set up REITs but care needs to be taken not to fall foul of the regime as the costs of losing REIT status can be severe.

‘At least two REITs have had their tax-exempt status revoked in the last four years. This has significant tax and operational consequences including triggering corporation tax liabilities. Future rental income and gains become fully taxable and investor appeal...