REITs are interesting. If you browse the FTSE 100 you’ll see a few, and they look attractive from a yield perspective. However, much of what a UK REIT pays a company that owns its shares, and often all of it, is not a dividend in the tax sense. It is a property income distribution, taxed as property income at the corporation-tax rate, where an ordinary dividend would usually be exempt. Held through a broker, it normally arrives with basic-rate tax already taken off. And HMRC publishes no list of REITs, so it’s important to know what you’re holding.

Why we noticed

We’ve held investments personally for years. This year was the first time we held them through one of our companies, and one of the first things the company bought was Land Securities. We knew it was a REIT — a real estate investment trust. The dividend was the attraction.

What we hadn’t appreciated was how differently that dividend behaves inside a company. A company pays no corporation tax on most dividends it receives. It does on this one.

How a REIT payout is taxed

A single payout from a UK REIT can be two different things:

  • A property income distribution (PID). This is paid out of the REIT’s property rental business. In a company’s hands it is treated as profits of a UK property business and taxed at the company’s corporation-tax rate — unless the company is taxed on distributions as trading income (a share dealer, say).
  • An ordinary dividend. Anything paid out of the REIT’s other, taxed business is a normal dividend, and is usually exempt like any other (see the dividend exemption).

Often most or all of a payment is a PID, but not always. The REIT’s own dividend announcement says how much is which.

Then there is the tax taken off. A UK-resident company is entitled to be paid a PID without any tax deducted, but only if the REIT reasonably believes the company is the beneficial owner. If you hold through a broker’s nominee account, the REIT usually has no information about who that is, unless a declaration reaches it through the nominee. HMRC’s guidance is that where the REIT has no information, “the default option” is to deduct tax. (One older HMRC page says companies will “in general” be paid gross. The more recent guidance, and our own experience, say otherwise.) The deduction is basic-rate income tax: 20% for 2026-27.

Our first Land Securities payout was entirely a PID: about £1,700 before tax, with about £335 taken off. That £335 isn’t lost. The company sets it against its own corporation tax for the accounting period. But it has to be recorded and claimed, or the company ends up paying full corporation tax on the payout on top of the tax already deducted.

Why REITs are different

A UK REIT pays no corporation tax on the income and gains of its property rental business. In return, it must pay out at least 90% of that income to shareholders each year, and its shareholders are taxed on it as if they’d received income from property directly.

So the tax hasn’t disappeared. It has moved from the REIT to you. That’s why a payout that looks exactly like a dividend on your statement isn’t treated like one.

How to tell you’re holding one

This is the awkward part. HMRC publishes guidance on how a company becomes a REIT, and each REIT has to give HMRC notice, but HMRC doesn’t publish a list of the companies that have. When we searched gov.uk in October 2026 we found guidance and forms, but no list. Status has to be established company by company.

The places you’d naturally look don’t help much:

  • The broker statement. The payout usually appears as a single line, net of tax. We found the tax deducted hard to see: you wait for the annual tax summary, or dig into the statement’s detail. At AJ Bell, the PDF cash statement shows the detail for one dividend at a time. The spreadsheet download shows only the net amount.
  • The FCA’s instrument data, which a lot of financial software relies on. It codes Land Securities, British Land and SEGRO as ordinary shares, and doesn’t mark them as REITs. They are ordinary shares, but that’s not the part that decides the tax.

The places that do help:

  • The company’s own annual report or website, which will say it is a UK REIT.
  • Its dividend announcement, which states how much of the payout is a PID and how much is an ordinary dividend.
  • The detail on the broker’s statement, where it shows it. AJ Bell’s cash statement, exported for that dividend, shows “Dividend type: Property Interest” and the tax withheld.
  • The London Stock Exchange’s monthly list of REITs. It’s the exchange’s list rather than HMRC’s, but a good starting point.

In practice, you’d probably search for it — and only if someone remembers to check. There aren’t many UK REITs, so it’s an easy check to forget.

What to check

If you look after a company’s investments, the one thing worth taking from this: a holding can look like any other share and still be a REIT, and if it is, it’s taxed differently. For each listed share the company holds, ask whether it’s a UK REIT. If it is, check that the PID part of each payout is in taxable income, and that the tax deducted has been claimed against corporation tax.

How Portive handles it

We built Portive so we wouldn’t have to do this by hand. For each share, it expects REIT status from a data source that can see it, rather than from the FCA’s coding. It works each payout out from the REIT’s own dividend announcement, checks it against the cash received and the broker’s statement, and says so where it can’t tell rather than guessing. It then records the PID as taxable property income, with the tax deducted set against the company’s corporation tax. A payout that mixes a PID and an ordinary dividend is one we flag for now, rather than post automatically.

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