Corporation Tax Act 2010 section 535

Gains

Section 535 sets out how capital gains on asset disposals are treated for tax purposes when a company is, or is a member of, a UK REIT, distinguishing between gains arising from property rental business and those from residual business.

• Gains on assets used wholly and exclusively for property rental business are exempt from capital gains tax; assets with only brief mixed use (totalling less than a year) also qualify for full exemption.
• Where an asset has been used partly for property rental and partly for residual business for periods totalling at least a year, only the portion of the gain reasonably attributable to property rental business is exempt.
• Gains arising from the residual business of a UK REIT that are charged to corporation tax are taxed at the main corporation tax rate, without any reduction for companies with small profits.
• Where a percentage of property rental gains is excluded from a group member's financial statements under section 533(3), that same percentage is treated as gains of residual business for corporation tax purposes.