D7.1115B Liability to corporation tax on chargeable gains
Gains on direct disposals of assets used wholly and exclusively for the purposes of the property rental business (ie the business that is tax-exempt) are not chargeable gains for tax purposes1. For disposals made on or after 6 April 2019 by UK REITs and companies that are members of UK REIT groups, an appropriate proportion of any gains on rights or interests in companies that derive at least 75% of their value from UK land ('UK property rich companies') are also exempt. This also applies to disposals of rights or interests in an offshore collective investment vehicle (a 'relevant fund') to which TCGA 1992, Sch 5AAA, para 8 applies and where no election under that paragraph has been made2, see C2.1164.
An asset includes part of an asset or an interest in or rights in relation to an asset3.
In some cases, gains on the disposals of assets that have been used in the property rental business will be taxable. These circumstances, and the relevant tax treatment, are set out in D7.1140.
The capital gains provisions of the REIT regime are to be interpreted together with the provisions of TCGA 19924.
The one exception to this is that on the sale of part of an asset used wholly and exclusively for the purposes of the property rental business, it is not necessary to follow the part disposal rules5. The chargeable gains base cost of the asset should instead be calculated by reference to a reasonable