Click here to download the relevant form for claiming exemption from withholding tax on PID dividend payments:
Declaration of Eligibility for Gross PID payments Beneficial Owner
Declaration of Eligibility for Gross PID payments Intermediary
Important note
This summary of tax consequences for shareholders is intended to provide only a general outline of the subjects covered. It should neither be regarded as comprehensive nor sufficient for making decisions, nor should it be used in place of professional tax advice. Assura plc accepts no responsibility for any loss arising from any action taken or not taken by any person using this material. If you are in any doubt as to your tax position or if you may be subject to tax in a jurisdiction other than the UK, you should consult your own professional advisors.
Dividend payments
A Real Estate Investment Trust (“REIT”) may pay dividends as either a Property Income Distribution (“PID”) or a normal dividend or a combination of both. The amount a REIT must pay as a PID is determined by reference to its tax exempt property profits as determined by the REIT regulations. Assura expects to pay a mixture of PID and non-PID dividends; the Board will decide the most appropriate make-up on a dividend-by-dividend basis.
It is possible for a PID to be paid either as a cash dividend or a stock dividend. Assura has in the past offered shareholders a Non-PID scrip alternative and considers on a dividend by dividend basis whether to offer this to shareholders.
UK tax treatment of dividend receipts
For UK resident individuals who receive tax returns, the PID from a UK REIT is included as other income. On the tax return, the total amount of the PID received is shown in box 17, the amount of tax shown as deducted on the voucher is shown in box 19 and the fact the income is PID should be included in box 21 (box references are to 2018 return).
The non-PID element of dividends will be treated in exactly the same way as dividends received from other non-REIT UK companies. The tax free Dividend Allowance (£5,000 for 2017/18) will apply to the non-PID element of dividends received by UK resident shareholders subject to UK income tax from 6 April 2016. It should be noted that this Allowance does not apply to the PID element of dividends.
For UK resident individuals who receive self-assessment income tax returns, any normal dividend paid by the UK REIT is included on the return as a dividend from a UK company. Your dividend voucher will show your shares in the company, the dividend rate and dividend payable. Put the total dividend payments in box 4 (box references are to 2018 return).
Withholding tax on PIDs
For most shareholders, PIDs are paid after deducting withholding tax at basic rate income tax, currently 20%. So, if a PID of £100 is paid, the company will pay £20 to HMRC and £80 to the shareholder.
Because of the withholding tax, a UK individual taxable at the basic rate should have no further tax to pay. Higher rate taxpayers (40%) and additional rate taxpayers (45%) will have an additional tax liability of 20% and 30% (25% from 6 April 2013) of the gross PID respectively. Someone who does not pay tax, perhaps because of personal allowances, may in their tax return reclaim the tax withheld.
Gross payment of PIDs for certain categories of shareholder
Under the REITs rules, certain categories of shareholder are entitled to receive PIDs without deduction of tax. Shareholders qualifying for gross payment are principally UK resident companies, UK public bodies, UK charities, UK pension funds, and the managers of ISAs, PEPs, Child Trust Funds, and partnerships where all members qualify as one of the aforementioned bodies. Most shareholders, including all individuals and all non-UK residents, do not qualify.
Shareholders who qualify for gross payment are required to complete one of the two forms included on Assura’s website. The first form is to be used when the registered owner is also the beneficial owner and the second form is for a registered owner to certify that the underlying beneficial owner or owners qualify. Where a registered holding has mixed beneficial owners including non-qualifying shareholders, the certification cannot be given and all the PID is paid net.
The completed forms should be submitted to the Company’s Registrars, Link Asset Services, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU. It is only necessary to complete a form once. For qualifying shareholders who have not previously submitted a form, this must be received by the Registrars by the record date to qualify for gross payment of the PID element of upcoming dividends.
Foreign shareholders
Non-resident shareholders in countries with double tax treaties with the UK, which provide for lower rates of withholding tax on dividends than 20%, may be able to make claims for repayment of the difference from HMRC. Claim forms for non-resident individuals and companies may be downloaded from the HMRC website at http://www.hmrc.gov.uk/international/dta-claim.htm#1 or by contacting HM Revenue & Customs, Residency, Fitz Roy House, PO Box 46, Nottingham, England NG2 1BD.
Sale of shares by UK and non-UK resident shareholders
From 6 April 2019 the gain on sale of Assura shares will be within the charge to UK tax for all shareholders, whether UK resident or non-UK resident, subject to possible tax treaty relief for non-UK residents or any exemption for tax exempt investors.
The gain for non-UK residents will be calculated by deducting the value at 5 April 2019 from the net sale proceeds, with the option to elect instead to deduct original cost. The value of Assura shares on 5 April 2019 was £0.571 per share.
Gains realised by non-UK resident individuals must generally be reported to HM Revenue & Customs within 30 days of the disposal.
Gains realised by UK residents should be reported on the tax return in the usual way.
Further details can be found on HM Revenue & Customs website here.
