Corporation Tax Act 2010 section 555

Assets: change of use

Section 555 deals with the tax consequences when a UK REIT transfers an asset from its tax-exempt property rental business to its taxable residual business.

• When an asset moves from property rental business to residual business, it is treated as sold and immediately reacquired at market value, but any resulting gain is not a chargeable gain.
• For capital allowances purposes, the deemed sale and reacquisition takes place at written-down value, generating no allowances or charges and no opportunity to elect for apportionment of the sale price.
• If a percentage of property rental business gains is excluded from the group's financial statements because those gains are attributable to a non-member, that same percentage is treated as gains of the member's residual business for corporation tax purposes.
• For non-UK members of a group UK REIT, references to property rental business are read as references to UK property rental business; the section also applies to joint venture companies, including non-UK resident joint venture companies.