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HMRC internal manual

Guidance on Real Estate Investment Trusts

Background: general definitions relating to parts of a UK-REIT

The UK-REIT legislation uses a number of terms to describe the part of the vehicle that carries on tax-exempt activities and the parts that carry on other activities. These are divided into the activities carried on before the vehicle joined the regime, activities carried on while it is in the regime, and activities carried on by the vehicle after it has left the regime.

For single company UK-REITs, each term describes a part of the company - see below. For Group REITs, each term covers the activities of parts of one or more members of the group - see GREIT01015.

Definitions relating to the company - section 105(3) FA 2006

C (pre-entry)

This is the company before it enters the regime. That is, the period up to, but not including, the first day of the accounting period of the company referred to in the section 109 FA 2006 notice.

C (tax-exempt)

This is the company after it enters the regime so far as it carries out property rental business that satisfies Conditions 1 to 3 of section 107 FA 2006. That includes all the property business of the company, regardless of the location of the property.

The income and assets of this part of the company need to meet the 75% tests in the Balance of Business conditions in section 108 FA 2006.

C (residual)

This is the company after it enters the regime so far as it does not carry out tax-exempt property rental business. All income and expenses of the company that do not fall within C (tax-exempt) are within C (residual).

C (post-cessation)

This is the company after it has left the regime. That is, the period starting on the day after the date specified in the notice stating that Part 4 of FA 2006 is no longer to apply to the company. The notice may be given under sections 128, 129 or 130 FA 2006.