There are a number of UK tax considerations for overseas companies owning UK property, such as:
Corporation Tax
Annual Tax on Enveloped Dwellings
Stamp Duty Land Tax
Benefits-In-Kind
Registration of Beneficial Ownership with Companies House
HMRC ‘Nudge Letters’
These are each outlined below.
Corporation Tax
Non UK resident companies owning UK property are subject to corporation tax in the UK on rental income from that property and/or on capital gains arising from sale of the property or of ‘property rich’ assets such as shares in companies deriving 75% or more of their gross asset value from UK land. Only gains relating to the period from April 2015 (in the case of residential property) and April 2019 (in the case of commercial property and investments in property-rich entities) are taxable.
Annual Tax on Enveloped Dwellings
All companies including UK resident and UK non resident companies which own UK residential property with a value in excess of £500,000 are subject to the Annual Tax on Enveloped Dwellings (ATED). The amount of tax depends on the value of the property. Relief from the tax charge is available where the property is let out or is held as stock for resale. All companies holding UK residential property with a value of more than £500,000 need to file an annual ATED tax return to HMRC even if just to claim one of the reliefs. Returns must be filed and tax paid annually for the year ended 31 March by 30 April following the start of the year. If a company acquires a residential property within the year, it has 30 days to file a return and pay any tax due.
Stamp Duty Land Tax
Stamp Duty Land Tax (SDLT) is charged at 15% on overseas companies which acquire UK residential property for more than £500,000 which is not for letting or for development for sale. A 2% surcharge also applies to all acquisitions of residential property by overseas companies.
Benefits-In-Kind
If UK property is made available to a director or member of the director’s family there may be a taxable benefit in kind for the director concerned and a National Insurance liability for the company as well as an annual P11D filing obligation. HMRC can deem a person to be a director for this purpose in certain circumstances.
Registration of Beneficial Ownership with Companies House
Overseas companies (and other entities) owning UK land may be required to register their ‘beneficial owners’ with Companies House and renew the registration annually within 14 days of the anniversary of the first registration. Beneficial owners are essentially individuals holding more than 25% of the company. Failure to update the register is criminal offence and may attract penalties; furthermore, a company will not be able to buy or sell UK land until it has registered
HMRC ‘Nudge Letters’
HMRC recently launched a new campaign to tackle non compliance linked to offshore companies owning UK property. Nudge letters are being issued based on information obtained from the Land Registry inviting companies to make disclosures of any unpaid tax.
As ever, the devil is in the detail so specific advice should be taken in each case.
Contact Us
Please contact us to find out how the above applies in your circumstances and how you can reduce your tax liabilities and maximise your tax efficiency.
Please note that the above is for general information only and does not constitute financial or tax advice. You should not rely on this information to make or refrain from making any decisions. You should always obtain independent professional advice in respect of your own situation.
