»Ê¹ÚÌåÓýapp

Prior to 17th July 2012 when a company joined the UK-REIT regime, either as a single company or as part of a group, an Entry Charge of 2% of the market value of the properties that transfer into the property rental business was payable (CTA2010/S538). »Ê¹ÚÌåÓýapp charge was payable by each company joining the regime at the same time as CT on the profits of the first accounting period of the company after it has joined the regime.

This charge was abolished with the repeal of CTA2010/S538 to S540 by FA2012/S21.

»Ê¹ÚÌåÓýapp mechanism for collecting the Entry Charge is to bring into charge to CT, as income otherwise not charged (CTA2009/S979), an amount of notional income calculated in accordance with a given formula. »Ê¹ÚÌåÓýapp notional income was treated as arising to the residual business of the company. »Ê¹ÚÌåÓýapp income was treated as arising on the day the company enters the regime. No losses, expenses or allowances could be set off against this notional income or the tax arising (CTA2010/S538(5)).

»Ê¹ÚÌåÓýapp amount of notional income was 2% of the aggregate market value of properties that are transferred to the property rental business divided by the rate of tax applicable to the company’s profits.

Group REITs

»Ê¹ÚÌåÓýapp above rules applied to the principal company and any wholly owned subsidiaries at the date the group joined the regime in respect of UK and overseas properties of UK companies and UK properties of non-UK companies. »Ê¹ÚÌåÓýapp charge was payable by the group members (including the principal company) in proportion to the market value of the properties each of them owned that transferred into their own tax-exempt property rental business on entry. Where a subsidiary was not wholly owned the market value of the properties it owned was reduced to reflect the level of non-group ownership.

»Ê¹ÚÌåÓýapp entry charge was payable also in respect of the market value of the interest which the REIT had in property rental business assets held via partnerships, unit trusts and joint ventures.

When a new company joined a group that was already a Group REIT, the new subsidiary paid an Entry Charge in the same way as a company that was a member of the group when the group joined the regime. »Ê¹ÚÌåÓýapp notional income arose to the residual part of the new group member on the day after it joined the group, since that marks the start of a new accounting period for the new member.