Taxes Consolidation Act 1997 section 739L

Calculating the IREF taxable amount

Section 739L sets out the formula used to calculate the IREF taxable amount arising on an IREF taxable event.

• The IREF taxable amount is calculated using the formula A × (B/C) − D + E, which isolates the portion of value attributable to the IREF's property-related retained profits.
• The formula reduces the taxable amount by any purchased IREF profits that have not yet been distributed (D), so that a unitholder is not taxed on profits already reflected in their acquisition cost.
• An uplift (E) is added where the value of the IREF taxable event exceeds the balance-sheet value of the unit, but only where the event falls within paragraph (b) of the definition of "value of an IREF taxable event" in section 739K(1).
• The balance-sheet value of a unit is the IREF's net asset value per unit at the computation date, reduced by the amount originally subscribed for that unit.