Self-storage company Big Yellow will become a REIT after winning its battle with HM Revenue & Customs about the classification of its income
Big Yellow said today that HM Revenue had withdrawn its objection to the company becoming a REIT and that it would convert backdated to 15 January.
The problem had revolved around how the tax paid by Big Yellow is classified. It is currently classified as schedule D, which covers tax paid on trading and service income, whereas REIT legislation states that 75% of a company’s tax must be schedule A, which covers tax payable on rental income.
Big Yellow will now carry out a valuation of its qualifying property assets as at 15 January to establish the amount of the 2% conversion charge.
Chief executive Jimmy Gibson said: 'We believe that becoming a REIT will be of significant benefit to shareholders, creating an enhanced level of future dividends in a more tax-efficient and transparent structure.
'In addition, we believe that the self-storage industry as a whole will benefit from the creation of a growing specialist REIT sector, with improved access to capital, driving further development of this relatively young market.'