Income Tax Act 2007 section 576

Manufactured dividends on UK shares: Real Estate Investment Trusts

Section 576 deals with the tax treatment of manufactured property income dividends (MPIDs) that represent property income dividends (PIDs) paid by Real Estate Investment Trust (REIT) companies or by principal companies of REIT groups.

• A manufactured dividend that represents a property income dividend from a REIT is treated as if it were a real property income dividend in the hands of the recipient or the underlying owner.
• Where someone claims title to the MPID through an intermediary such as a nominee, the MPID is still treated as a real PID for income tax purposes, even if the intermediary is not itself an income tax payer.
• Where a dividend is only partly a property income dividend, the manufactured dividend rules in this section apply only to the extent that the manufactured dividend represents a PID.
• The effect is to ensure that manufactured property income dividends from REITs carry the same income tax consequences as genuine property income dividends, regardless of the chain of ownership.