Corporation Tax Act 2010 section 541

Ring-fencing of property rental business

Section 541 requires that the property rental business of a UK REIT (whether a single company or a group) must be ring-fenced and treated as entirely separate from all other business activities for corporation tax purposes.

• The property rental business of a UK REIT is treated as a separate business, distinct from any pre-entry business, residual business, and post-cessation business
• Losses from the property rental business cannot be set off against profits of the residual business, and vice versa; likewise, pre-entry losses cannot be set off against property rental profits, and property rental losses cannot be set off against post-cessation profits
• If a percentage of property rental profits is excluded from the group's financial statements because it is attributable to a non-member, that percentage is instead treated as profits of the member's residual business
• For non-UK members of a group UK REIT, the ring-fence applies specifically to their UK property rental business rather than to property rental business generally