»Ê¹ÚÌåÓýapp

A HoER Ìýcharge is imposed only if the UK-REIT company (principal company in the case of a Group REIT) makes a distribution Ìýto or in respect of a HoER, that is not an excluded holder, as defined in CTA2010/S553 Ìý(see IFM22105).

Situations when the charge does not apply

Ìý.Ìý Ìý Ìý»Ê¹ÚÌåÓýapp charge will not apply merely because a shareholder has a stake in the company of 10% or more. Ìý»Ê¹ÚÌåÓýapp charge only arises where a PID is paid to that shareholder

Ìý.Ìý Ìý ÌýNeither is the tax charge applied if the person beneficially entitled to the distributionÌýis not also a HoER.

Ìý.Ìý Ìý Ìý»Ê¹ÚÌåÓýapp charge will not apply if the company has taken reasonable steps to prevent the dividend being paid to a HoERÌý(²õ±ð±ðÌýIFM22125ÌýtoÌýIFM22150).

Ìý .Ìý ÌýÌý»Ê¹ÚÌåÓýapp charge will also not apply if the HoER is an excluded holder (see IFM22105).

Examples to illustrate when a charge might arise are set out in IFM22113. Ìý

How the HoER charge is collected

»Ê¹ÚÌåÓýapp charge is levied on the distributor (i.e. UK-REIT company or principal company in the case of a Group REIT). »Ê¹ÚÌåÓýapp company is deemed to have received a notional amount of income in the period in which any distribution is paid to a HoER, which is treated as profits of residual business: CTA10/S551.

»Ê¹ÚÌåÓýapp amount of income brought into charge is defined in CTA2010/S552 and is designed to recover as much tax from the UK-REIT as the HoER could potentially claim under a DTA. ÌýThis is dealt with in more detail in IFM22120.

In the case of a Group REIT, the HoER rules only apply to distributions made to shareholders by the principal company. »Ê¹ÚÌåÓýappre are no restrictions on ownership of shares in subsidiary members of the group and so no HoER charge arises if a distribution is paid by a subsidiary of the Group REIT to a minority shareholder (with an interest of 10% or more in the subsidiary).

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