Corporation Tax Act 2010

Recipients of distributions U.K.

548 Distributions: liability to tax U.K.

(1) This section applies if a shareholder of the principal company of a group UK REIT receives a distribution of amounts shown in the financial statement under section 532(2)(a) (statement of group's property rental business) as—

(a) profits or gains (or both) of UK members of the group, or

(b) profits or gains (or both) of UK property rental business of non-UK members of the group.

(2) In subsection (1) the reference to the principal company includes a reference to the principal company of the post-cessation group.

(3) This section also applies if a shareholder of a company UK REIT receives a distribution in respect of profits or gains (or both) of property rental business of the company.

(4) In subsection (3) the reference to a company UK REIT includes a reference to the post-cessation company.

(5) If the shareholder is within the charge to corporation tax, the distribution is to be treated as profits of a UK property business (within the meaning given by section 205 of CTA 2009) [F1 so far as the distribution is a distribution of exempt profits ] .

(6) If the shareholder is not within the charge to corporation tax, the distribution is to be treated as profits of a UK property business (within the meaning given by section 264 of ITTOIA 2005) [F2 so far as the distribution is a distribution of exempt profits] .

(7) In the case of a non-UK resident shareholder, the distribution is not non-resident landlord income for the purposes of regulations under section 971 of ITA 2007 (income tax due in respect of income of non-resident landlords).

(8) See sections 973 and 974 of ITA 2007 (income tax due in respect of distributions) for provision about the deduction of sums representing income tax in relation to distributions of a kind mentioned in this section.

[F3 (9) This section does not apply in relation to a distribution falling within section 549A(6) or (8) so far as the distribution is a distribution of exempt profits.

(10) For the purposes of this Chapter a distribution is a “distribution of exempt profits” so far as the distribution falls within section 550(2)(a), (aa), (c) or (d).

(11) In applying section 550 for the purposes of subsection (10) in relation to a distribution made by the principal company of a post-cessation group or by a post-cessation company—

(a) subsection (1)(a) is to be read as referring to the principal company of the post-cessation group, or (as the case may be)

(b) subsection (1)(b) is to be read as referring to the post-cessation company.]

Textual Amendments

F1 Words in s. 548(5) inserted (with effect in accordance with Sch. 19 para. 13(2)-(4) of the amending Act) by Finance Act 2013 (c. 29), Sch. 19 para. 5(2)

F2 Words in s. 548(6) inserted (with effect in accordance with Sch. 19 para. 13(2)-(4) of the amending Act) by Finance Act 2013 (c. 29), Sch. 19 para. 5(3)

F3 S. 548(9)-(11) inserted (with effect in accordance with Sch. 19 para. 13(2)-(4) of the amending Act) by Finance Act 2013 (c. 29), Sch. 19 para. 5(4)

549 Distributions: supplementary U.K.

(1) Section 548 does not apply in relation to a shareholder so far as the shareholder—

(a) is a person who is charged to tax under Part 3 of CTA 2009 (trading income) in respect of distributions made by companies that are received in the course of a trade not consisting of insurance business,

(b) is a dealer in securities who is charged to income tax under Part 2 of ITTOIA 2005 (trading income) in respect of distributions made by companies,

(c) is an individual member of Lloyd's (within the meaning given by section 184(1) of FA 1993) and the distribution is made in respect of assets forming part of—

(i) a premium trust fund of the member (within the meaning given by section 174 of FA 1993), or

(ii) an ancillary trust fund of the member (within the meaning given by section 176 of that Act), or

(d) is a corporate member of Lloyd's (within the meaning given by section 230(1) of FA 1994) and the distribution is made in respect of assets forming part of—

(i) a premium trust fund belonging to the member (within the meaning given by section 222 of FA 1994), or

(ii) an ancillary trust fund belonging to the member (within the meaning given by section 223 of that Act).

F4 (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F5 (2A) Sections 409 to [F6 413A] of ITTOIA 2005 (stock dividend income from UK resident companies) do not apply to relevant distributions received by a shareholder [F7 so far as they are distributions of exempt profits] . ]

(3) “Relevant distribution” means—

(a) in the case of a group UK REIT, a distribution from the principal company of the group of amounts shown in the financial statement under section 532(2)(a) (statement of group's property rental business) as—

(i) profits or gains (or both) of UK members of the group, or

(ii) profits or gains (or both) of UK property rental business of non-UK members of the group, and

(b) in the case of a company UK REIT, a distribution from the company in respect of profits or gains (or both) of its property rental business.

[F8 (3A) Relevant distribution” does not include a distribution falling within section 549A(6) or (8) so far as the distribution is a distribution of exempt profits.]

(4) Relevant distributions received by a shareholder [F9 (so far as they are distributions of exempt profits)] are to be treated for the purposes of section 548(5) and (6) as the profits of a single business (irrespective of whether the shareholder receives different distributions in different capacities).

(5) That single business is separate from—

(a) any other UK property business (within the meaning given by section 205 of CTA 2009) carried on by the shareholder,

(b) any other UK property business (within the meaning given by section 264 of ITTOIA 2005) carried on by the shareholder,

(c) any overseas property business (within the meaning given by section 206 of CTA 2009) carried on by the shareholder, and

(d) any overseas property business (within the meaning given by section 265 of ITTOIA 2005) carried on by the shareholder.

(6) If a shareholder is a partnership, subsection (4) applies to receipts by a partner of a share of any distribution as it applies to receipts by a shareholder.

Textual Amendments

F4 S. 549(2) omitted (with effect in accordance with Sch. 1 para. 73 of the amending Act) by virtue of Finance Act 2016 (c. 24), Sch. 1 para. 32(2)

F5 S. 549(2A) inserted (with effect in accordance with Sch. 4 para. 12 of the amending Act) by Finance (No. 3) Act 2010 (c. 33), Sch. 4 para. 5

F6 Word in s. 549(2A) substituted (with effect in accordance with Sch. 1 para. 73 of the amending Act) by Finance Act 2016 (c. 24), Sch. 1 para. 32(3)

F7 Words in s. 549(2A) inserted (with effect in accordance with Sch. 19 para. 13(2)-(4) of the amending Act) by Finance Act 2013 (c. 29), Sch. 19 para. 6(2)

F8 S. 549(3A) inserted (with effect in accordance with Sch. 19 para. 13(2)-(4) of the amending Act) by Finance Act 2013 (c. 29), Sch. 19 para. 6(3)

F9 Words in s. 549(4) inserted (with effect in accordance with Sch. 19 para. 13(2)-(4) of the amending Act) by Finance Act 2013 (c. 29), Sch. 19 para. 6(4)

[F10 549A Distributions from one UK REIT to another UK REIT U.K.

(1) If a company receives a distribution falling within subsection (6) or (8), the distribution is to be treated as profits of a property rental business carried on by the company in the United Kingdom.

Such profits are referred to in this Part as “UK REIT investment profits”.

(2) The property rental business mentioned in subsection (1) is to be treated as separate from any other property rental business of the company.

(3) References to profits of property rental business or UK property rental business are to be read as including UK REIT investment profits accordingly, including where the profits referred to are otherwise profits calculated in accordance with international accounting standards or section 599.

(4) Section 549(2) and (2A) applies in relation to distributions falling within subsection (6) or (8) as it applies in relation to relevant distributions.

(5) Subsection (1) applies in relation to a distribution only so far as the distribution is a distribution of exempt profits.

This is subject to section 531(4A) and (4B).

(6) A distribution falls within this subsection if—

(a) it is made by the principal company of a group UK REIT to a shareholder of the company which is—

(i) a member of another group UK REIT, or

(ii) a company UK REIT, and

(b) it is a distribution of amounts shown in the financial statements under section 532(2)(a) (statement of group's property rental business) as—

(i) profits or gains (or both) of UK members of the group, or

(ii) profits or gains (or both) of UK property rental business of non-UK members of the group.

(7) In subsection (6) the reference to a distribution made by the principal company includes a reference to a distribution made by the principal company of the post-cessation group.

(8) A distribution falls within this subsection if—

(a) it is made by a company UK REIT to a shareholder of the company which is—

(i) a member of a group UK REIT, or

(ii) another company UK REIT, and

(b) it is a distribution in respect of profits or gains (or both) of property rental business of the company.

(9) In subsection (8) the reference to a distribution made by a company UK REIT includes a reference to a distribution made by the post-cessation company.]

Textual Amendments

F10 S. 549A inserted (with effect in accordance with Sch. 19 para. 13(2)-(4) of the amending Act) by Finance Act 2013 (c. 29), Sch. 19 para. 7