Taxes Consolidation Act 1997 section 705G

Charge to tax

Section 705G exempts a Real Estate Investment Trust (REIT) or member of a group REIT from tax on income and capital gains arising from its property rental business, subject to an anti-avoidance rule for certain short-term disposals of developed assets and an exemption from deposit interest retention tax.

• A REIT or member of a group REIT is not chargeable to tax on income from its property rental business or on capital gains arising from the disposal of assets of that business.
• Where a REIT acquires a rental asset, spends more than 30 per cent of its market value on developing it and disposes of it within three years of completion of the development, the resulting profits are chargeable to corporation tax at 25 per cent.
• Deposit interest retention tax (DIRT) does not apply to deposits held by a REIT or a member of a group REIT.
• The exemptions apply only to the property rental business; income and gains from the residual business (i.e. activities other than property rental) remain taxable in the normal way.