REITs – stock dividends

Graham Chase, Tax Partner, CMS

One of the criticisms of the REIT regime has been the 90% distribution requirement, which restricts the ability of a REIT to preserve cash for reinvestment. So the Chancellor’s decision to allow the issue of stock dividends in lieu of cash is welcome – these dividends will now count towards the profit distribution requirement. There is no tax saving for shareholders, the distribution is taxed in the same way as a cash payment.

The measure is to be introduced as soon as possible in the next Parliament.

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