31st Mar 2015 13:37
LONDON (Alliance News) - Schroder Real Estate Investment Trust Ltd Tuesday said it wants to relocate to the UK for tax reasons and enter the country's real estate investment trust regime.
The trust, which has a market capitalisation of GBP324.0 million, is currently not resident in the UK, meaning it doesn't pay UK tax on capital gains, although its property-owning subsidiary companies are required to pay the UK's 20% rate on their income.
"To become tax resident in the UK the company would move its central management and control from Guernsey to the UK," Schroder Real Estate Investment Trust said. The move will also result in the retirement of Alison Ozanne from her role as a director.
Ozanne will be replaced by Stephen Bligh, a fellow of the Institute of Chartered Accountants in England & Wales and chairman of the audit and risk committee for the Department of Business, Innovation and Skills.
The trust had previously been able to benefit from a deal between its main property-owning subsidiary and UK tax authorities over allowances and expenses that could be deducted from allowances and expenses but the arrangement has now expired.
"Based on advice received from the company's tax advisors and in light of changes in commercial lending practice, it is likely that the amount of UK income tax payable going forward would be higher, which would reduce net income and shareholder returns," the trust said in a statement.
Under UK government rules, real estate investment trusts in the UK are given tax advantages under a move to boost investment in the property sector.
"The main tax advantage of the REIT regime is that the profits (i.e. income and gains) of a REIT's qualifying property rental business are exempt from UK income tax and corporation tax," Schroder Real Estate Investment Trust said in a statement.
"In very broad terms, what the regime seeks to achieve is to replicate as far as possible the tax treatment that would apply if the shareholders held UK property directly, by moving the taxation point from the companies holding properties (within the REIT Group) to the shareholders. This is administered by the application of withholding tax on distributions made by the principal company of the REIT Group," it added.
The trust also said there could be longer term benefits from converting into a UK real estate investment trust, such as improved liquidity due to being able to access a "wider potential investor base".
Schroder Real Estate Investment Trust shares were up 0.8% at 62.50 pence on Tuesday.
By Samuel Agini; [email protected]; @samuelagini
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