GREIT05040 - Capital gains: reallocation within a group of gain or loss on de-grouping (sections 179A and 179B TCGA)

Although there are no special rules changing the way in which sections 179A and 179B TCGA operate where a UK-REIT is involved, the way in which the rules operate is affected by section 136 FA 2006, which deems G (property rental business) to be a separate group from G (residual), G (pre-entry) and G (post-cessation) for the purposes of section 179A and 179B.

Sections 179A and 179B TCGA allow a de-grouping charge to be treated as arising to a company other than the chargeable company provided both companies were members of the relevant capital gains group at the time the charge accrued. The effect of making an election under section 179A is that any deemed chargeable gain or allowable loss is treated as arising to the other company, who will then be able to offset its allowable losses against any deemed chargeable gain or use any deemed allowable loss to cover its chargeable gains. For more details on the application of de-grouping rules and elections, see CG45305 and CG45469.

The effect of section 136 FA 2006 is to prevent a Group REIT trying to exempt a de-grouping gain that accrues in the taxable part of the group from tax by moving it into the ring fence. It also prevents a Group REIT trying to utilise a de-grouping loss that accrues in the tax-exempt part of the group by moving it across the ring fence and into the taxable part of the group.