Commentary

D7.1102 Property rental business

Corporate tax
Corporate tax | Commentary

D7.1102 Property rental business

Corporate tax | Commentary

D7.1102 Property rental business

UK REITs are not charged to tax on income and gains accruing in the 'property rental business' (ie business that is, or forms part of a UK or overseas property business chargeable under CTA 2009, ss 205 and 206 respectively)1. For these purposes, the rules that provide for profits in connection with tied premises to be treated as part of a trade and not part of a property business (B5.611) are ignored. This allows, for example, tenanted pub businesses to become UK REITs2.

The definition of 'property rental business' is expanded in the group context to include business carried on by a non-UK member if the business would be property rental business if carried on by a UK company3.

Furthermore, a distribution from one UK REIT to another UK REIT also falls within the definition of 'property rental business'4, although these profits are treated as separate from other property rental business profits5. The legislation refers to these as 'UK REIT investment profits'; see D7.1127.

Certain types of business and income are specifically excluded from being property rental business6.

There can be a fine dividing line between what is and what is not property rental business. This was illustrated at the Committee stage of the 2006 Finance Bill where it was confirmed that:

'If a shopping centre

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