{"id":1838,"date":"2025-11-06T08:56:52","date_gmt":"2025-11-06T08:56:52","guid":{"rendered":""},"modified":"2026-07-26T16:24:05","modified_gmt":"2026-07-26T14:24:05","slug":"hmrc-guidance-on-capital-allowances-for-real-estate-investment-trusts-reits","status":"publish","type":"article","link":"https:\/\/leyton.com\/uk\/insights\/articles\/hmrc-guidance-on-capital-allowances-for-real-estate-investment-trusts-reits\/","title":{"rendered":"HMRC guidance on\u00a0Capital Allowances for\u00a0Real Estate Investment Trusts (REITs)"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"1838\" class=\"elementor elementor-1838\" data-elementor-post-type=\"article\">\n\t\t\t\t<div class=\"elementor-element elementor-element-339fab91 e-flex e-con-boxed e-con e-parent\" data-id=\"339fab91\" data-element_type=\"container\" data-e-type=\"container\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t\t\t<div class=\"elementor-element elementor-element-78d89da3 elementor-widget elementor-widget-text-editor\" data-id=\"78d89da3\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t\t\t\t\t\t\n<p class=\"wp-block-paragraph\">HMRC\u2019s\u00a0<a href=\"https:\/\/www.gov.uk\/hmrc-internal-manuals\/investment-funds\" target=\"_blank\" rel=\"noreferrer noopener\">Investment Funds Manual<\/a>\u00a0provides\u00a0guidance\u00a0on Capital Allowances\u00a0for\u00a0Real Estate Investment Trusts (REITs).\u00a0<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The\u00a0guidance confirms\u00a0that\u00a0a claim for first year allowances\u00a0(FYA)\u00a0in respect of capital expenditure (e.g. full expensing) and the\u00a0annual\u00a0investment\u00a0allowance (AIA) is permissible but not mandatory. This is different to the position for writing down allowances\u00a0(WDA), which must be claimed in full where available.\u00a0<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">How do&nbsp;Capital Allowances&nbsp;impact&nbsp;REIT distribution requirements?&nbsp;<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The&nbsp;amount&nbsp;of&nbsp;<a href=\"https:\/\/majjane.leyton.com\/uk\/capital-allowances\/\" target=\"_blank\" rel=\"noreferrer noopener\">Capital Allowances<\/a>&nbsp;claimed&nbsp;influences the level of Property Income Distribution that must be paid by the REIT&nbsp;in order to&nbsp;satisfy the 90 percent distribution requirement.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Capital Allowances&nbsp;are&nbsp;taken into account&nbsp;in the calculation of the profits of the property rental business,&nbsp;which&nbsp;will have the effect of reducing profits and the property income distribution to, and the tax liability of, the shareholders.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">A&nbsp;Capital Allowances&nbsp;&#8216;shadow&#8217; regime&nbsp;operates&nbsp;within the property rental business, although the obligation to&nbsp;consider&nbsp;the maximum&nbsp;Capital Allowances&nbsp;does not extend to first year allowances or the annual investment allowance, where there is flexibility about the amounts&nbsp;taken into account.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In practice, a REIT is therefore obliged to identify the amount of qualifying expenditure it has incurred in each accounting period and include the maximum&nbsp;Capital Allowances&nbsp;available (after any claims for&nbsp;FYA&nbsp;or the&nbsp;AIA&nbsp;it may choose to make are taken into account) in the calculation of tax-exempt profits.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">How Leyton can help<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The choice over claiming&nbsp;the&nbsp;first year&nbsp;allowance and&nbsp;annual investment allowance&nbsp;is&nbsp;an important strategic decision for any REIT.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Our specialist team of&nbsp;<a href=\"https:\/\/majjane.leyton.com\/uk\/capital-allowances\/\" target=\"_blank\" rel=\"noreferrer noopener\">Capital Allowances<\/a>&nbsp;experts can provide advice and support to ensure you are making the most of&nbsp;the&nbsp;tax relief available, while&nbsp;meeting HMRC\u2019s requirements with confidence.&nbsp;&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Get in touch&nbsp;today to find out how they can help.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><em>If you enjoyed this article, you might also like:<\/em><em><\/em><\/p>\n\n\n<section id=\"ori-list_block\" class=\"ori-list full-w \"><div class=\" ori-list_only\">\n    <div class=\"ori-container\">\n        <div class=\"ori-row\">\n            <div class=\"list-content\">\n                                <ul>\n                    <li><a href=\"https:\/\/majjane.leyton.com\/uk\/insights\/articles\/our-guide-to-capital-allowances\/\">Our guide to Capital Allowances<\/a><\/li><li><a href=\"https:\/\/majjane.leyton.com\/uk\/insights\/articles\/capital-allowances-on-second-hand-property-purchases\/\">Capital Allowances on second-hand property purchases<\/a><\/li>                <\/ul>\n            <\/div>\n        <\/div>\n    <\/div>\n<\/div><\/section>\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>HMRC\u2019s&nbsp;Investment Funds Manual&nbsp;provides&nbsp;guidance&nbsp;on Capital Allowances&nbsp;for&nbsp;Real Estate Investment Trusts (REITs).&nbsp; The&nbsp;guidance confirms&nbsp;that&nbsp;a claim for first year allowances&nbsp;(FYA)&nbsp;in respect of capital expenditure (e.g. full expensing) and the&nbsp;annual&nbsp;investment&nbsp;allowance (AIA) is permissible but not mandatory. This is different to the position for writing down allowances&nbsp;(WDA), which must be claimed in full where available.&nbsp; How do&nbsp;Capital Allowances&nbsp;impact&nbsp;REIT distribution requirements?&nbsp; The&nbsp;amount&nbsp;of&nbsp;Capital [&hellip;]<\/p>\n","protected":false},"author":120,"featured_media":1915,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[109,110],"tags":[611],"expertise":[470],"class_list":["post-1838","article","type-article","status-publish","format-standard","has-post-thumbnail","hentry","category-capital-allowances","category-construction","tag-construction","expertise-capital-allowances"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v28.1 (Yoast SEO v28.1) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>HMRC guidance on\u00a0Capital Allowances for\u00a0Real Estate Investment Trusts (REITs) - Leyton United Kingdom<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/leyton.com\/uk\/insights\/articles\/hmrc-guidance-on-capital-allowances-for-real-estate-investment-trusts-reits\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"HMRC guidance on\u00a0Capital Allowances for\u00a0Real Estate Investment Trusts (REITs)\" \/>\n<meta property=\"og:description\" content=\"HMRC\u2019s&nbsp;Investment Funds Manual&nbsp;provides&nbsp;guidance&nbsp;on Capital Allowances&nbsp;for&nbsp;Real Estate Investment Trusts (REITs).&nbsp; The&nbsp;guidance confirms&nbsp;that&nbsp;a claim for first year allowances&nbsp;(FYA)&nbsp;in respect of capital expenditure (e.g. full expensing) and the&nbsp;annual&nbsp;investment&nbsp;allowance (AIA) is permissible but not mandatory. This is different to the position for writing down allowances&nbsp;(WDA), which must be claimed in full where available.&nbsp; How do&nbsp;Capital Allowances&nbsp;impact&nbsp;REIT distribution requirements?&nbsp; The&nbsp;amount&nbsp;of&nbsp;Capital [&hellip;]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/leyton.com\/uk\/insights\/articles\/hmrc-guidance-on-capital-allowances-for-real-estate-investment-trusts-reits\/\" \/>\n<meta property=\"og:site_name\" content=\"Leyton\" \/>\n<meta property=\"article:modified_time\" content=\"2026-07-26T14:24:05+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/leyton.com\/wp-content\/blogs.dir\/9\/files\/2025\/11\/REIT.webp\" \/>\n\t<meta property=\"og:image:width\" content=\"1422\" \/>\n\t<meta property=\"og:image:height\" content=\"910\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/webp\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/leyton.com\\\/uk\\\/insights\\\/articles\\\/hmrc-guidance-on-capital-allowances-for-real-estate-investment-trusts-reits\\\/\",\"url\":\"https:\\\/\\\/leyton.com\\\/uk\\\/insights\\\/articles\\\/hmrc-guidance-on-capital-allowances-for-real-estate-investment-trusts-reits\\\/\",\"name\":\"HMRC guidance on\u00a0Capital Allowances for\u00a0Real Estate Investment Trusts (REITs) - 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