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HMRC internal manual

Guidance on Real Estate Investment Trusts

Entry to the regime: effects of entry: capital losses from pre-entry periods

The tables below and at GREIT03105 and GREIT03110 set out the position for utilising losses etc arising in accounting periods up to the date the REIT rules first apply and which have not been offset against other profits of pre-entry accounting periods, either in the same company or surrendered as group relief.

For single company REITs, the table applies to the company. For Group REITs, the table applies to each company that is a member of the group at the date it joins the regime. It also applies to pre-entry losses etc for companies that join a Group REIT after the group has joined the regime.

The tables refer to the activities of the pre-entry company, the property rental business after the regime first applies to it and the other taxable activities in that period as the residual business.

References to a ‘qualifying’ property business means activities that come within the definition of ‘property rental business’ as set out in section 519 CTA 2010. The disposals in question are those which took place in accounting periods before the company or group became a REIT, where the losses arising have not been utilised in accounting periods before entry.

Table 1: capital losses

Disposals of assets that were involved in Type of loss etc Can be used against
Qualifying UK property business    


Section 8(1)(b) TCGA   
Chargeable gains of the residual business regardless of the use to which the asset was put before disposal      
  Overseas qualifying property business    
  All other activities    
  Other capital losses Type of loss etc Can be used against
  Losses on deemed sale and repurchase of assets involved in property rental business. Section 8(2) TCGA Losses are not allowable since gains are not ‘chargeable’ (section 536(4) CTA 2010)  



See GREIT03105 and GREIT03110 for Tables 2 and 3: trading and other losses, expenses etc.