Commentary

D7.1115A Liability to corporation tax on profits

Corporate tax
Corporate tax | Commentary

D7.1115A Liability to corporation tax on profits

Corporate tax | Commentary

D7.1115A Liability to corporation tax on profits

Company UK REITs are within the charge to corporation tax but, in accordance with the provisions described here, are not charged to corporation tax on profits of the property rental business (calculated as set out below)1. An exemption from tax on chargeable gains is provided in further provisions2, see D7.1115B.

Profits arising from the residual business which are charged to corporation tax are taxable at the main rate of corporation tax (and, from 1 April 2023, the standard small profits rate does not apply to them3).

REIT companies are also treated as 'large' companies for transfer pricing purposes4

Calculation of profits

The REIT regime requires that there is a mechanism for calculating 'taxable' profits of the property rental business even though these profits are not subject to tax in the company UK REIT, because in particular, the amount that a company UK REIT must distribute each year and the profit: financing cost ratio the company UK REIT must satisfy to avoid a tax charge are calculated by reference to 'taxable' profits. The provisions described in this article therefore set out how profits are calculated for the purposes of5 the

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