Friday, August 19, 2022

Tax changes for UK expats owning UK property to come into effect from April


Expats who own property in the UK will need to pay corporation tax on their profits from April

For the first time beginning April, UK expats who own property in the country will need to pay corporation tax on their profits, according to new guidance from HM Revenue & Customs.

The new UK expat rules, effective from April 6, 2020, will apply to non-resident companies.

By June 30, HMRC will automatically issue corporation tax references and a call to file a tax return unless the company has already paid tax through the non-resident landlord scheme and has no chargeable gains for the year.

The measures also apply to mutual funds, investment trusts, exchange traded funds (ETFs) and real estate investment trusts (REITS) based outside the UK.

Some transitional rules will apply, explains HMRC in the guidance.

If a company’s only income is from UK property after April 6, 2020, no income tax payment on account is expected for 2020-21 and any credit balances will be repaid.

Foreign companies that have had tax deducted under the non-resident landlord scheme are not expected to file a tax return.

Non-resident companies starting a property business after April 6, 2020, and tax filings already required through self-assessment will also be exempt.

The rules still allow for non-resident companies paying the annual tax on enveloped dwellings (ATED) if the property owned is for residential use.

Corporation tax filings will align with company accounting periods.

The rules do not apply to expats or non-resident foreign nationals owning and renting out property in the UK who have tax deducted from rents under the non-resident landlord scheme or who file an annual self-assessment tax return to account for their rental profits or capital gains.

The tax reporting rules already in place remain the same for these taxpayers.

Foreign companies owned 97,000 homes in England and Wales in January 2018, according to data from the UK Land Registry. Out of these, 23,000 properties belonging to 11,700 companies are registered on the British Virgin Islands.

The research further showed that 44% of homes owned by foreign companies were in London – while 10% (11,500) were in the City of Westminster and 6,000 in the borough of Kensington and Chelsea.


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