Draft legislation (accessible version)
Published 18 July 2023
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1. Real estate investment trusts
(1) Schedule 7 makes amendments to the corporation tax regime for real estate investment trusts.
SCHEDULE 1
REAL ESTATE INVESTMENT TRUSTS
Amendment of CTA 2010
1. CTA 2010 is amended in accordance with paragraphs 2 to 6.
Certain institutional investors required to be widely held
2. (1) Section 528 is amended as follows.
(2) In subsection (4)바카라 사이트�
a) in the words before paragraph (a), after 바카라 사이트渃ompany바카라 사이트� insert 바카라 사이트渕eets the non-close condition.바카라 사이트�, and
b) omit paragraphs (a) and (b).
(3) In subsection (4A)바카라 사이트�
(a) in paragraph (a)바카라 사이트�
(i) in sub-paragraph (i), after 바카라 사이트�2000)바카라 사이트� insert 바카라 사이트渢hat meets the genuine diversity of ownership condition (see section 528ZB(2)) or the non-close condition바카라 사이트�, and
(ii) in sub-paragraph (ii), after 바카라 사이트淎ct)바카라 사이트� insert 바카라 사이트渁nd that meets the genuine diversity of ownership condition or the non-close condition바카라 사이트�,
(b) in paragraph (b)바카라 사이트�
(i) in sub-paragraph (i), after 바카라 사이트淎ct바카라 사이트� insert 바카라 사이트渁nd that meets the genuine diversity of ownership condition or the non-close condition바카라 사이트�,
(ii) in sub-paragraph (ii), for 바카라 사이트渁nd바카라 사이트� substitute 바카라 사이트渢hat바카라 사이트�, and
(iii) in that sub-paragraph, after 바카라 사이트�2000)바카라 사이트� insert 바카라 사이트渁nd that meets the genuine diversity of ownership condition or the non-close condition바카라 사이트�,
(c) in paragraph (c), after 바카라 사이트�2000)바카라 사이트� insert 바카라 사이트渢hat meets the genuine diversity of ownership condition or the non-close condition바카라 사이트�, and
(d) in paragraph (e), after 바카라 사이트渨ho바카라 사이트� insert 바카라 사이트渕eets the non-close condition and who바카라 사이트�.
(4) After subsection (4B) insert바카라 사이트�
바카라 사이트�(4C) The non-close condition is met바카라 사이트�
(a) in relation to a company, if바카라 사이트�
(i) it is not a close company, or
(ii) it is a close company but only because it has an institutional investor as a direct or indirect participator, and
(b) in relation to a person or scheme other than a company, if it would fall within paragraph (a)(i) or (ii) if바카라 사이트�
(i) the person바카라 사이트檚 business or the scheme were a company, and
(ii) the interests of persons in the business or scheme were shares in the company.바카라 사이트�
(5) In subsection (5), for 바카라 사이트渟ubsection (4)(a)바카라 사이트� substitute 바카라 사이트渟ubsection (4C)(a)(i)바카라 사이트�.
(6) After that subsection insert바카라 사이트�
바카라 사이트�(5A) For the purposes of subsection (4C)(a)(ii)바카라 사이트�
(a) a person is a 바카라 사이트渄irect participator바카라 사이트� if the person is a participator for the purposes of Part 10 of CTA 2010 (see section 454), and
(b) a person is an 바카라 사이트渋ndirect바카라 사이트� participator in a company if the person has a share or interest in the capital or income of the company through another body corporate or other bodies corporate.
(5B) For the purposes of subsection (5A)(b)바카라 사이트�
(a) reference to having a share or interest in the capital or income of a company through a body corporate is to be read in accordance with sub-paragraphs (9) and (10) of paragraph 46 of Schedule 5AAA to TCGA 1992 (meaning of direct or indirect participator), and
(b) a person is regarded for the purposes of that subsection and those sub-paragraphs as having a share or interest in the capital or income of a company if the person would be a participator in the company as a result of section 454(2) of CTA 2010.
(5C) In determining whether a company is a close company for the purposes of the non-close condition바카라 사이트�
(a) the rights and powers of a person (바카라 사이트淎바카라 사이트�) are not to be attributed to another person (바카라 사이트淧바카라 사이트�) merely because A is a partner of P for the purposes of any attribution under section 451(4) (rights of a person바카라 사이트檚 associates to be attributed to the person etc in determining 바카라 사이트渃ontrol바카라 사이트�) , and
(b) a company (바카라 사이트淐바카라 사이트�) is not to be regarded as a close company only because a person possesses or is entitled to acquire the greater part of the voting power in C as a result of being a general partner in a limited partnership which is a collective investment scheme.바카라 사이트�
(7) In consequence of the other amendments made by this paragraph, in Schedule 5AAA to TCGA 1992, in paragraph 46(3)(a), for 바카라 사이트渟ection 528(4A)(a), (b), (c), (i) or (j)바카라 사이트� substitute 바카라 사이트渟ection 528(4A)(i) or (j)바카라 사이트�.
(8) Sub-paragraph (9) applies where바카라 사이트�
(a) immediately before the amendments made by sub-paragraphs (3) come into force, a company met the conditions in section 528 of CTA 2010, and
(b) the company would (ignoring sub-paragraph (9)) cease to meet those conditions only as a result of one or more persons ceasing to be regarded as institutional investors as a result of the making of those amendments.
(9) Such a person is to be treated as an institutional investor for the purposes of determining whether the company meets those conditions for so long as the person바카라 사이트檚 interest in the company 바카라 사이트�
(a) does not increase, and
(b) remains relevant to the question of whether those conditions are met.
(10) The amendments made by sub-paragraphs (2) and (4) are to be treated as having always had effect.
Insurance companies may be included in group UK REIT
3. (1) Section 606 (meaning of group) is amended as follows.
(2) In subsection (2), omit paragraphs (b) and (c) (but not the 바카라 사이트渙r바카라 사이트� at the end of paragraph (c)).
(3) In subsection (5), omit the definitions of 바카라 사이트渋nsurance company바카라 사이트� and 바카라 사이트渋nsurance subsidiary바카라 사이트�.
Property financing costs
4. (1) Section 544 (meaning of 바카라 사이트減roperty profits바카라 사이트� and 바카라 사이트減roperty financing costs바카라 사이트�) is amended as follows.
(2) In subsection (3)(a), for 바카라 사이트減roperty rental business of members of the group substitute 바카라 사이트渢he group바카라 사이트檚 property rental business in the United Kingdom바카라 사이트�.
(3) After subsection (3) insert바카라 사이트�
바카라 사이트�(3A) The reference in subsection (3)(a) to the group바카라 사이트檚 property rental business in the United Kingdom is a reference to바카라 사이트�
(a) property rental business of UK members of the group, and (b) UK property rental business of other members.바카라 사이트�
(4) Section 544 has effect, and is to be deemed always to have had effect, with the amendments made by sub-paragraphs (2) and (3).
(5) After subsection (4) insert바카라 사이트�
바카라 사이트�(4A) But property financing costs do not (for the purposes of section 543) include any expense for which a deduction would be not be allowed in calculating profits in accordance with section 599, other than an expense which is disallowed only as a result of the application of Part 10 of TIOPA 2010 (corporate interest restriction).바카라 사이트�
(6) The amendment made by sub-paragraph (4) has effect for accounting periods ending on or after 1 April 2023.
Single property rule
5. In section 529 (conditions as to property rental business), in subsection (2B), for paragraph (a) substitute바카라 사이트�
바카라 사이트�(a) where the group or company is a UK REIT, the later of바카라 사이트�
(i) where its property rental business previously met conditions A and B, the day after the last day on which it met both of those conditions, and
(ii) where its property rental business previously met condition C in relation to a property other than the property it now seeks to rely on to meet that condition, the day after the last day on which it met that condition in relation to that other property, or바카라 사이트�.
Disposal of rights or interests in UK property rich funds
6. (1) Section 535A (disposals of rights or interests in UK property rich companies) is amended as follows.
(2) After subsection (7) insert바카라 사이트�
바카라 사이트�(7A) Any such reference also includes the disposal of a right or interest in a fund (a 바카라 사이트渞elevant fund바카라 사이트�) that바카라 사이트�
(a) is an authorised contractual scheme (within the meaning given by section 237(3) of FISMA 2000) which is a co-ownership scheme (within the meaning given by section 235A of that Act), and
(b) is UK property rich as determined in accordance with paragraph 3 of Schedule 5AAA to TCGA (UK property rich collective investment vehicles etc).바카라 사이트�
(3) In subsection (8) after 바카라 사이트渟ubsection (7)바카라 사이트� insert 바카라 사이트渙r (7A)바카라 사이트�.
Corporate interest restriction and disposal of interests in UK property rich companies
7. (1) Section 452 of TIOPA 2010 (corporate interest restriction:REITs) is amended as follows
(2) In subsection (1)(b), after 바카라 사이트�(5)바카라 사이트� insert 바카라 사이트�, or section 535A(2),바카라 사이트�.
(3) In subsection (4)(b), after 바카라 사이트�(5)바카라 사이트� insert 바카라 사이트�, or section 535A(2),바카라 사이트�