Corporation Tax Act 2010 section 535A

Gains: disposals of rights or interests in UK property rich companies

Section 535A provides an exemption from chargeable gains for UK REITs (or members of UK REIT groups) when they dispose of rights or interests in companies that are "UK property rich", and sets out how to calculate the proportion of any gain that is exempt.

• When a UK REIT or a member of a UK REIT group disposes of a right or interest in a "UK property rich" company (one deriving at least 75% of its value from UK land), an appropriate proportion of any gain is exempt from tax as a chargeable gain.
• The "appropriate proportion" is the ratio of the value of the target company's assets used for UK property rental business to the total value of all its assets, measured at the start of the accounting period in which the disposal takes place.
• The exemption extends to disposals of interests in certain offshore collective investment vehicles and UK co-ownership authorised contractual schemes that are themselves UK property rich, with a modified calculation of relevant property rental business assets in those cases.
• The exemption does not apply where the gain is already exempt (or reduced) under the substantial shareholding exemption rules for qualifying institutional investors in Schedule 7AC to TCGA 1992.