Corporation Tax Act 2010 section 785

Treatment of payer: Real Estate Investment Trusts

Section 785 provides corporation tax relief for a company that pays a manufactured dividend, where that manufactured dividend represents a property income dividend (PID) paid by a UK Real Estate Investment Trust (REIT).

• When a company pays a manufactured dividend that stands in for a property income dividend (PID) from a UK REIT, it may be entitled to corporation tax relief.
• A PID is a special type of dividend paid out of the tax-exempt property rental profits of a UK REIT or the principal company of a group UK REIT.
• The relief applies only to the extent that the manufactured dividend represents a PID, not other types of dividend the REIT may pay.
• This provision ensures that the payer of the manufactured dividend is not disadvantaged for corporation tax purposes when the underlying dividend is a PID from a UK REIT.