705IA Disposals and reinvestments

(1) This section applies where a REIT or group REIT disposes of a property of its property rental business after 8 October 2019.

(2)(a) For the purposes of this section ‘net proceeds’ means the full proceeds received on disposal less any amounts used to repay any specified debt which had been employed in the acquisition, enhancement or development of the disposed property.

(2)(b) An amount equal to the net proceeds referred to in paragraph (a) is the amount which is taken into account for satisfying the condition laid out in subsection (3)(ii).

(3) Where the net proceeds on the disposal of a property of the property rental business are not –

1. invested in the acquisition of a new property for use in the REIT or group REITs property rental business,
2. invested in the development or enhancement of a property currently held for the purposes of the property rental business, or
3. distributed to the shareholders of the REIT or the shareholders of the principal company of the group REIT

before –

1. the ending of the 24 month period following the disposal,
2. the date of cessation of the REIT or group REIT if earlier than 1., or
3. for the purposes of meeting the conditions set out in paragraphs (a) and (b), the expiry of the 12 month period beginning prior to the date of disposal of the property

(4) then any amount not reinvested or distributed will be treated as property income of the REIT or group REIT arising in the year in which the earlier of 1. or 2. falls.

The non-resident dividend withholding tax exemption is disapplied for the purposes of this section.

Relevant Date: Finance Act 2021