Calling overseas UK property owners – be aware of critical tax changes

There have been substantial changes to the taxation of UK residential property. These changes have particularly impacted such properties held through corporate structures, or held by non-residents. Those affected should seek advice and review their tax affairs urgently.  

The UK’s stable political environment and track record of good returns on investment in residential property has attracted large numbers of overseas buyers for many years. However, existing overseas owners and prospective buyers based overseas need to be aware of the recent tax changes which impose new obligations and which may significantly affect their returns and longer-term strategy.

The UK government is on a drive to tighten up on the tax take generated through foreign owned property. This is part driven by the need to raise tax revenue in a time of public spending cuts but also to try to slow down the growth in the value of the UK property market driven in part by the influx of speculative foreign investment.

 

FURTHER DETAILS

From the 6th April 2015 Capital Gains Tax (CGT) applies on the disposal of UK residential property by non-resident individuals and companies. Prior to this only certain disposals of such property by non-natural persons, e.g. non-resident companies, would be within the charge to tax.

In the 2013 Finance Act the UK government introduced measures targeted at the indirect ownership of UK residential property. The introduction of an ‘Annual Tax on Enveloped Dwellings’ (ATED) is a tax payable by both UK and Non-Resident companies, partnerships with a corporate member and collective investment vehicles that own high value UK residential property (a dwelling). The amount of ATED payable is calculated using a banding system based on the value of the property. The charge increases each year by reference to the UK ‘Consumer Prices Index’. Certain reliefs and exemptions are available which could eliminate the tax and these must be claimed on the ATED tax return.

It was announced in the Summer 2015 Budget that UK residential property held in corporate structures would be subject to inheritance tax. These proposals are likely to be enacted into legislation and become effective from 6 April 2017.

Action - This bulletin only touches the surface of some of the changes, and as ever there will be exceptions and individual cases will all be different. Essentially if you are a non-resident owner of UK property you should seek professional advice in order to understand the impact of these changes and what the new responsibilities and liabilities might be, and to understand if the effect of the changes might be mitigated through careful planning. 

Click here for further details:
UK residential property owned by non-UK residents
- Recent changes to the taxation of UK residential property

 

Contact the AGN Firms best prepared to provide further information:
HAZLEMS FENTON 

Contact Person: David Hughes
Phone: (+44 20)7437 76 66 
EMail: DavidHughes@HazlemsFenton.com
Firm website: www.hazlemsfenton.com

SHIPLEYS LLP

Contact Person: Stuart Dey
Phone:  (+44 20) 7312 0000 
EMail: deys@shipleys.com
Firm website: www.shipleys.com

AGN International Ltd is a company limited by guarantee registered in England & Wales, number 3132548, registered office at 24 Greville Street, London EC1N 8SS, United Kingdom.

AGN International Ltd (and its regional affiliates; together "AGN") is a not-for-profit worldwide membership association of separate and independent accounting and advisory businesses. AGN does not provide services to the clients of its members, which are provided by Members alone. AGN and its Members are not in partnership together, they are neither agents of nor obligate one another, and they are not responsible or liable for each other's services, actions or inactions.

This communication is generic in nature, for general information only and does not constitute professional advice. It should not be relied upon in arriving at any decision, and no responsibility is accepted. Salient facts should be verified and professional advice should be taken before taking or refraining from any course of action.

Copyright © 2015 AGN International Ltd, All rights reserved. You are receiving this because you are a member of AGN International Ltd



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AGN International Ltd is a company limited by guarantee registered in England & Wales, number 3132548, registered office 6 Hays Lane, London Bridge, London SE1 2HB, United Kingdom.
AGN International Ltd (and its regional affiliates; together "AGN") is a not-for-profit worldwide membership association of separate and independent accounting and advisory businesses. AGN does not provide services to the clients of its members, which are provided by Members alone. AGN and its Members are not in partnership together, they are neither agents of nor obligate one another, and they are not responsible or liable for each other's services, actions or inactions.

Copyright © 2020 AGN International Ltd, All rights reserved. You are receiving this because you are a member of AGN International Ltd




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