Dividend Income paid Net

Without seeing what Linton's link has to say, I expect the nuance is that some of the money British Land are paying you is not a "dividend" (a distribution of the net profits of an operating business after the company has paid tax).

Many funds and investment companies pay dividends like that and they do not have to withhold tax from you when they do it, they simply pay you whatever amount per share they declared they're going to pay.

However, British Land is structured as a Real Estate Investment Trust under UK tax regulations. One of the features is that it doesn't have to pay tax on the net property income it earns from its investments (rental income and so on). That's very efficient for investors such as tax exempt pension funds or individuals holding shares in the REIT via an ISA or SIPP, because they can make a distribution of property income to those investors and they won't pay tax on it because they're not taxpayers.

However for individuals who aren't investing through an ISA or SIPP, the taxman makes them withhold basic rate tax at source when they pay over the property income to you. You pay tax on the income just like you would if you had owned the office block or warehouse or care home or shopping centre yourself and received income from tenants. So if your normal income tax rate is 40% or more you'll owe more tax than has been deducted at source and if you are normally a nil rate taxpayer you can claim it back from HMRC and if you're a 20% taxpayer it's already the right amount.

The thing to recognise is that these distributions are streams of untaxed property income coming out of the investments as PID (property income distributions). The REIT didn't pay any tax on those profits, they are your profits, so they are required to withhold tax from you if you're getting your hands on them and are not investing through an ISA or SIPP.

Whereas a corporate dividend like you get from HSBC or GSK is a payment of income which was left over after the company has already paid its corporation tax bill at whatever necessary rate, and the government helps you out by giving you a special annual allowance and then a reduced tax rate to receive that dividend income.

Not every distribution made by British Land or other REITs will always be PID. Sometimes it will be, but other times it will just be general corporate profits and sent to you as a dividend. So you have to check out the statements/ vouchers or read the reports or announcements to find out what dividends you got (gross) versus what PID you got (net of 20% withholding tax).

Your record-keeping headaches and tax returns are avoided by holding your REITs or PAIFs through an ISA or SIPP where no tax is due on dividends or PIDs.

*Edit: I see that this was already answered while I was writing the above on the Tube home! Good to see I guessed right