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HMRC internal manual

Guidance on Real Estate Investment Trusts

HM Revenue & Customs
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Distributions: attribution rules: category (e) - other


If there is a balance remaining after attributing the distribution to Categories (a) to(d) (see GREIT08035), the remaining part of the distributionis out of other income, gains and anything else that is included in distributablereserves.

Example 7

The facts are as in Example 6 (see GREIT08035) but Cdecides to distribute 1,600 in March 2011 attributed wholly to 2010 profits.

The next step is as in Example 6. Taxable income (b) is 130, tax-exempt income (c) 100,tax- exempt gains (d) 180 b/f + 70 and other (e) is 320 b/f + 25, as before.

The final step is to attribute the 1,600 distribution by reference to the five categories.The first 900 is Category (a) and is a PID payable under deduction of basic rate tax(other than for gross payment cases – see GREIT08125). Cdecides to attribute nothing to Category (b) (taxable income) (but see below).

C has no choice about the balance of 700. This is attributed first to Category (c),tax-exempt income, up to the amount in the pot (100). This amount is a PID and payableunder deduction of basic rate tax (other than for gross payment cases).

The balance of 600 is then attributed to Category (d), tax-exempt gains, up to the amountin tax-exempt gains pot (250). The next 250 of the distribution is therefore a PID,attributed to Category (d) and payable under deduction of tax (other than for grosspayment cases).

The balance of 350 is then attributed to Category (e), other, up to the amount in theother pot (345). This is a normal dividend, payable gross.

That leaves 5 not yet attributed. The only other pot with anything left in it is taxableincome (b), so C has to revisit the decision in the second step and must, if it wants todistribute 1,600, attribute some to Category (b). This remaining 5 is thereforeattributable to (b) taxable income and is a normal dividend, payable gross.

The 125 distributable reserves to carry forward is therefore all (b) taxable income, andthe other elements of the pot are all zero.

This table summarises the position:

Category reserves at allocate profits of 2010 reserves c/f attribute 2010 final distribution reserves c/f
  31-Dec-09     15-Mar-11  
(a)   900 900 (900)  
(b)   130 130 (5) 125
(c)   100 100 (100) -
(d) 180 70 250 (250) -
(e) 320 25 325 (325) -
totals 500 1,225 1,725 (1,600) 125