705I Funds awaiting reinvestment

(1) A REIT or group REIT may accumulate and hold cash from the sale of property of its property rental business or from the issue of shares.

(2)(a)(i)&(ii) If the proceeds are invested other than in property for the property rental business, the profits arising from such investment will be regarded, for a period of 2 years, as being profits of the property rental business and therefore exempt from tax. The period of 2 years is calculated from the date of disposal where a property is sold or from the date shares are issued. However, once the period of 2 years has elapsed, the profits arising from such investment will be taxable.

(2)(b) Profits arising before and after the period of 2 years may be apportioned on a time basis.

(3) If the proceeds are still held after the 2 year period, they are treated as being assets of the residual business.

Relevant Date: Finance Act 2021