Commons Sense

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- Sitting 1

14 December 2021

Proposing MP
Lucy Frazer Con
South East Cambridgeshire
Type
Public Bill Committee

At a Glance

Issue Summary

The statement addresses the introduction of a new regime for the taxation of asset-holding companies used by funds and institutional investors, aiming to enhance the UK's competitiveness as an asset management hub. Clause 15 addresses targeted tax rule changes for real estate investment trusts (REITs) to enhance their attractiveness and competitiveness in the UK.

Action Requested

The Government proposes to introduce technical amendments to ensure that the new regime reflects policy intentions accurately and maintains consistency with broader tax rules. These amendments are based on industry feedback following the introduction of the Finance Bill.

Key Facts

  • The reforms aim to enhance UK's competitiveness for asset management.
  • The regime includes a gains exemption, specific rules for investment returns, and exemptions from withholding tax and stamp duty.
  • Amendments refine eligibility criteria and ensure consistency with wider tax rules.
  • Around 100 UK REITs are currently established since the introduction in 2006.
  • The requirement for REIT shares to be admitted to trading on a recognised stock exchange is being removed if institutional investors hold at least 70% of ordinary share capital.
  • A new simplified balance of business test will exclude certain activities relating to planning obligations from the test.
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