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HMRC internal manual

Guidance on Real Estate Investment Trusts

Distributions: attribution rules: category (b) - income from taxable activities

If the distribution is more than the 90% minimum (see Category (a) at GREIT08020) the company has a choice over the next part. It can be earmarked as relating to as much or as little of the company’s income from taxable activities as the company chooses.

There is no requirement to attribute all the excess over the 90% requirement to income from taxable activities: the company can choose to attribute just a part of it, or indeed none of it to this category. For information about the other Categories, see GREIT08030.

Income from taxable activities

For Category (b) purposes, this consists of amounts which derive from activities of a kind in respect of which CT is chargeable in relation to income. This therefore includes not only trading profits and any other income of C (residual), it also includes the difference between the income of the tax-exempt business as measured for tax purposes and the income as measured for accounting purposes. The main reason for such a difference is where capital allowances exceed depreciation for an accounting period.

Note that this category includes the amount in respect of the relevant accounting period, and any amounts that come within the description from previous periods (including pre-entry) to the extent they have not been earmarked already.

For examples of attributing distribution to Category (b), see GREIT08028.