Corporation Tax Act 2010 section 581

Early exit by notice

Section 581 deals with the corporation tax consequences when a UK REIT, or a company leaving a group UK REIT, disposes of property rental assets within two years of leaving the regime, where the entity had been in the regime for less than ten years.

• If a group or company voluntarily leaves the UK REIT regime by giving notice, having been a UK REIT for a continuous period of less than 10 years, and a relevant company disposes of a property rental asset within two years of cessation, special tax rules apply
• In these circumstances, the company's corporation tax liability on the disposal is calculated by ignoring certain deemed disposals that occurred during the REIT period — specifically deemed disposals on entry to the regime that produced a gain, deemed disposals on a change of asset use, and deemed disposals on cessation of REIT status
• The same rules apply where a company leaves a group UK REIT, provided either the group has been a UK REIT for less than 10 years or the company has been a member of the group for less than 10 years, and the company disposes of a property rental asset within two years of leaving
• For non-UK members of a group, the rules apply only to assets involved in UK property rental business, rather than property rental business more broadly