NON-RESIDENT company LANDLORD
Non resident companies that only have income from UK property are currently subject to income tax on the profit. This is due to change in April 2020 to make them subject to corporation tax from that date. The restriction on the relief for interest paid does not apply to companies.
ANNUAL TAX ON ENVELOPED DWELLINGS (ated)
This was originally a tax or charge levied on residential property held by “non-natural persons” (including companies). It levied an annual charge at increasing rates on property worth more than £2m. This has now been changed and the bands extended to include property worth more than £500,000. Properties are revalued every five years. The most recent valuation date is 5th April 2017 and ATED applies from 5th April 2018 to all properties worth more that £500,000 as at 5th April 2017. See Rates and Tables.
If you let your property you may claim relief from the charge. (There are a few other reliefs too). But you have to claim the relief, it is not given automatically. This means completing an additional return each year, and having the property valued every fifth year.
See also Annual Tax on Enveloped Dwellings.
STAMP DUTY LAND TAX (sdlt)
The 15% rate of Stamp Duty Land Tax was introduced at the same time as the ATED. This too has now been extended and so the 15% rate will also apply to company (and other non-natural person) purchases in the range of £1m to £2m from 6th April 2015 and purchases in the range of £500,000 to £1m from 6th April 2016. There are some exceptions.
In addition the purchase by a company will attract normally 3% uplift in SDLT on all purchases of buy to let property over £40,000.
CAPITAL GAINS TAX (cgt)
For those of you who hold your property through the medium of a small non-UK company you are now caught up in the extension of CGT to all non-residents (whether companies or individuals). Gains accruing after April 2015 on disposals after April 2015 are now subject to CGT. But remember it is only the increase in value from April 2015 to the date of sale that is taxed. Gains on disposals of UK property made by non-residents before April 2015 remain generally outside the scope of UK taxation.
The CGT rate for gains accruing while ATED was levied is 28%. After April 2019 non-resident companies will be subject to the Corporation Tax regime for the taxation of chargeable gains.
Get in touch today to find out how we can help you with your non-resident landlord tax obligations.