Four regulations were laid before the UK House of Commons on 1 November setting out further details of the rules relating to the taxation of UK-REITs and their investors.

The regulations laid Wednesday 1st November 2006 provide for an additional tax charge on a UK-REIT where a company holds an interest of 10% or more in the UK-REIT. This modifies the position proposed in the draft regulations published for consultation on 2 June 2006- where the tax charge would have applied where any legal person, including an individual or a pension scheme, held an interest of 10% or more in the UK-REIT. As a result of this modification the Government will make a small consequential change to the rules on residential property held by investment-regulated pension schemes (which include self invested personal pension schemes, or SIPPs). This will ensure that from 1 January 2007 the rules as set out in Schedule 29A FA 2004 will apply equally to a pension scheme holding an interest in a UK-REIT.

The regulations S.I. 2006/2864-2867, together with an explanatory memorandum, are available on http://www.hmrc.gov.uk/si/.

HMRC have issued draft guidance on the interpretation of the legislation relating to UK-REITs.

The guidance, in its present state represents HMRC's preliminary opinions on interpretation of the legislation but any changes in the published guidance will supersede this draft. The published version should be available from late January. The draft guidance is available at Section 2.13.