IFM23010 - Real Estate Investment Trust : Entry to the regime: notice to join: CTA2010/S523 and S524
Source: gov.uk (2025-04-17)


CTA2010/Part 12 enables a company or group which already carries on a property rental business, and meets certain conditions, to opt into the regime (CTA2010 /S518(1)). The property rental business must meet either property rental conditions A and B, or meet condition C (CTA2010 /S529).

If a company/group decides it wants to join the regime, the company/principal company of a group must provide a notice to HM Revenue & Customs specifying the accounting period from the beginning of which it wants the Real Estate Investment Trust legislation to apply (CTA2010 /S523 for a single company REIT and S524 for a group REIT). If the relevant conditions are met, the regime will apply to the company/group from the first day of the accounting period specified in the notice (and not on the day the notice is given).

'Accounting period' takes its normal CT meaning, so the date specified in the notice need not be by reference to the company's normal accounting reference date. For example, a company draws up its accounts to 31 March, but wants to join the regime with effect from 1 January 2017. The company need not change its accounting reference date, but the accounts to 31 March 2017 will be divided into two accounting periods for CT purposes. One will run from 1 April to 31 December 2016, and cover all the pre-REIT activities of the company. The other will cover 1 January to 31 March 2017.

Where a company joins a group after the notice comes into effect, there is no requirement to give a separate notice in respect of that company, or to give a fresh notice in respect of the expanded group.

Conditions to be met to give notice

To give notice, the company, or principal company of a group, has to meet Company Conditions A and B of CTA2010/S528. These are that:
- Condition A - the company must be a UK company (as defined in CTA2010/S521) and
- Condition B - the company is not an open-ended investment company (as defined by FISMA2000/S236).
For more detail on Company Conditions A and B, see IFM22010 (https://www.gov.uk/hmrc-internal-manuals/investment-funds/ifm22010).

Contents of the notice

CTA2010/S525 lists the required content of a notice to join the regime. The notice must be given in writing to HMRC, and it must be given before the start of the accounting period from which the company/principal company of a group wants to join the regime.

The notice must be accompanied by a statement that the company/principal company of a group reasonably expects Company Conditions A, B, C, E and F in CTA 2010/S528 will be satisfied throughout the accounting period specified in the notice (CTA2010/S525(1)) or alternatively that it reasonably expects Company Condition A, B, E and F will be satisfied throughout the accounting period specified in the notice and that Condition C is reasonably expected to be met for at least a part of the first day of that accounting period and throughout the remainder of that period (CTA2010/S525(2)-(4) – see below). Conditions A and B are covered above. The other Conditions are:
- Condition C - the company’s/principal company of a group REIT’s shares must be admitted to trading on a recognised stock exchange or at least 70% of the shares forming the company’s ordinary share capital are owned by one or more institutional investors,
- Condition E - the only shares it can have in issue are: - a single class of ordinary share capital and various classes of non-voting restricted preference shares, and
- Condition F - it is not party to any loans where, inter alia, the rates are dependent on the profits of the business or where there is an excessive rate of interest.
For more detail on Company Condition C see IFM22010 (https://www.gov.uk/hmrc-internal-manuals/investment-funds/ifm22010) and for Conditions E to F, see IFM22015 (https://www.gov.uk/hmrc-internal-manuals/investment-funds/ifm22015).

Condition D (the non-close condition) does not need to be met during the first 3-year period (CTA2010/S527(6)) and so there is no requirement for the company/principal company to make a statement about meeting this condition in the notice. However, as below, it is helpful, if Condition D is not met on entry, if information as to plans to meet Condition D are provided to HMRC alongside the notice.

HMRC has the power to prescribe in regulations requirements for further information to be included with the notice (CTA2010/S525(1)(d)). As at March 2025 there have been no regulations using this power.

Giving Notice

There is no prescribed format for giving notice. In addition to the statutory requirements described above the following additional information would help HMRC process a REIT notice more effectively:
- confirmation that there is an existing property rental business,
- confirmation that the conditions in S529 have been met,
- if condition C is met because of at least 70% of the ordinary shares being owned by one or more institutional investors, further detail to support how the requirement has been met,
- what plans are in place to meet condition D, if not met on the date of joining the regime and when it is expected that the condition will be met,
- the date accounts will be prepared to each year and confirmation of the first accounting period
- a copy of the group structure including VAT registration and PAYE scheme numbers
If you choose not to provide the additional information your notice will still be valid but we may need to contact you before issuing your acknowledgment. Providing this information at the same time as the notice may allow us to process the notice without the need to contact you.

The notice should be sent to the tax office that normally deals with the company and a copy emailed to xxx@xxx.xx or be sent by post to

Real Estate Investment Trusts (REITs) LB North East & Yorkshire S1775 Newcastle upon Tyne NE98 1ZZ

Initial failure to meet condition C

Where section CTA2010/S525(2) applies (company does not expect to meet condition C on the first day but reasonably expects to meet the condition throughout the rest of the first accounting period) the statement required will provide that the company/principal company of a group REIT reasonably expects Company Conditions A, B, E and F to be satisfied for the accounting period specified in the notice (CTA2010/S525(4)).

Where a company/principal company’s shares are not admitted to trading before giving notice to join the regime, the REIT may still be entitled to join provided that it is able to provide the statement that it reasonably expects to satisfy Company Condition C for at least a part of the first day of the accounting period specified and throughout the remainder of that accounting period as set out in CTA 2010/S525(4).

Initial failure to meet condition D

Condition D (the non-close condition) is relaxed for the first 3 years (CTA2010/S527(4) to (8)). If an accounting period ends in the 3 years following the date specified in the notice electing into the regime then condition D does not need to be met in that period. However if the accounting period begins before the end of the 3 years but ends after that period ends then condition D needs to be met in the period falling after the end of the 3-year period.

Group REITs – additional requirement

For a group which becomes a REIT there is an additional requirement, which is that the group must prepare and submit financial statements to HMRC as set out in CTA 2010/S527(2)(e) for each accounting period. The principal company must provide three sets of financial statements that are used to produce figures for other conditions the group as a whole must meet throughout each accounting period the group is in the regime. For more detail see IFM22300 (https://www.gov.uk/hmrc-internal-manuals/investment-funds/ifm22300).