UK company landlords pay corporation tax on the profit made from letting property. Generally the rules for calculating the profit are the same as for individual landlords. The principal differences between the taxation of the income of company landlords and individual landlords is that company landlords are taxed at corporation tax rates, there is no restriction on tax relief for interest, and gains are taxed at corporation tax rates.
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 as at 5th April 2012. From 5th April 2018 it is levied on properties worth more than £500,000 as at 5th April 2017.
See Rates and Tables.
If your company lets the property it 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 SDLT was introduced at the same time as the ATED. This too has now been extended and so the 15% rate also applies 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 after 6th April 2016. There are some exceptions.
CAPITAL GAINS TAX (CGT)
Companies pay tax on chargeable gains at the corporation tax rate. The CGT rate for gains accruing while ATED was levied is 28%. Get in touch today to find out how we can help you with your Capital Gains Tax return.
TAKING YOUR PROFIT FROM THE COMPANY
When you extract the profit for personal use you must remember that only the repayment of the loan made by you to the company is tax free. Dividends, salary, etc all attract further taxation.