Corporation Tax Act 2010 section 531

Conditions as to balance of business

Section 531 sets out the two balance of business conditions (Condition A and Condition B) that a UK REIT group or company must satisfy, requiring that at least 75% of both profits and assets relate to property rental business.

• Condition A requires that at least 75% of a group's or company's aggregate profits in an accounting period must come from property rental business, calculated before tax under international accounting standards and excluding certain items such as property disposal gains, hedging fair value changes, extraordinary items and planning obligation profits.
• Condition B requires that at the beginning of the accounting period, assets relating to property rental business plus any residual business assets held as cash or relevant UK REIT shares must represent at least 75% of total assets, valued at fair value under international accounting standards and ignoring any liabilities secured against those assets.
• Distributions received from another UK REIT that qualify under the inter-REIT distribution rules are treated as property rental business profits for the purposes of both conditions, ensuring that investment by one REIT in another does not undermine the balance of business tests.
• The tests include worldwide profits and assets of non-UK companies and also incorporate the relevant proportion of property rental business carried on by any joint venture company associated with the REIT.