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Property Tax

Maximising property tax relief and reducing the impact of capital taxes through effective asset structuring.

Did you know?

There have been a number of significant tax changes over recent years impacting both UK and overseas-based property investors.

Need to know…

Property tax in the UK has undergone considerable change in recent years.

Tax avoidance remains under the spotlight, and burdens and risks associated with tax liabilities have increased for both property investors and property developers.

Property tax also provides a substantial income stream for the UK government. At current levels, property tax as a share of total taxation is higher in the UK than anywhere else in the developed world.

Which means for property owners in the UK, minimising the impact of increasingly unfavourable property levies through tax planning has become business-critical.

It is a hugely complex area, with factors determining your tax liability ranging from the type of property concerned to the structure used to hold your real estate assets or of any real estate transaction – acquisition, disposal or development. Careful navigation is essential to maximise the opportunities for improving your tax treatment.

FAQs

Property tax advice for investors

There have been a number of significant changes over recent years impacting UK-based property investors.

These changes need to be factored in to your business model, and it may be desirable to review whether your business model remains appropriate.

Property is an asset class – whether residential or commercial – which is usually exposed to both IHT and CGT. We are leading the way in advising property investors and buy to let landlords on how to structure their portfolios.

For example, we advise buy to let landlords on how reduced income tax relief on finance costs will affect their particular situation and the options available to restructure things.

For commercial landlords, we provide guidance on the impact of other recent tax changes and the availability of tax reliefs such as capital allowances.

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Structuring

We can advise on the most appropriate structure for commercial and residential property ownership and disposal to meet your specific requirements and minimise tax liabilities under for example SDLT and CGT.

We have particular expertise where international aspects are involved, such as bringing an overseas structure onshore, holding an investment property in an overseas company, or transferring property within an organisation.

Multiple residences

Owning multiple residences raises a number of property tax issues, such as IHT, CGT and SDLT, each requiring careful tax planning.

We can advise on effective asset structuring and the tax issues that arise from the ownership of multiple residences.

Property tax advice for developers

Property development is a venture ‘in the nature of trade’, and, assuming other conditions are met, the property development activity will qualify for valuable reliefs, such as Entrepreneurs Relief (ER) for Capital Gains Tax purposes and Business Property Relief (BPR) in respect of IHT.

It is common, for commercial purposes, for a property developer to operate each development through a separate SPV. This can also achieve attractive tax benefits.

We can advise on how to approach this structure from a tax point of view, including the recent targeted anti-avoidance rules surrounding so-called ‘phoenix companies’.

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Enveloped dwellings

We can help you meet your compliance obligations for enveloped dwellings. We can advise on the implications for CGT, SDLT, and ATED purposes, including reliefs where possible.

The Annual Tax on Enveloped Dwellings (ATED) applies to non Natural Persons’ (NNP) owning UK residential property with a value in excess of £500,000. While certain reliefs are available from the ATED charge, it is common for the only asset of an NNP to be the property in question.

This can raise issues around funding payment of the ATED without falling within the definition of a remittance and causing further UK tax consequences.

International property

Whatever your interest in overseas property, you must ensure you are meeting tax liabilities, in all relevant jurisdictions.

We are experienced in providing tax planning and advisory services to property owners based in the UK and overseas covering all types of real estate across the globe.

Stamp Duty Land Tax (SDLT)

SDLT has undergone substantial change in recent years. Increased standard rates; devolved systems for Scotland and Wales; the introduction of new categories for additional residential properties and high-value residential property transactions.

The rules have never been more complex, requiring professional advice to ensure compliance while managing tax liability through effective planning. For example, opportunities remain to reduce SDLT rate through the multiple dwellings relief, and the purchase of six or more units in a single transaction can still benefit from lower rates applicable to commercial property.

Recent Property Tax Articles

Non Resident UK Property Disposal – CGT Tax Changes April 2019

Non-UK residents and the taxation of disposals of UK commercial property Over the last few years numerous changes have been made to the taxation of UK residential property including the introduction of Non-Resident Capital Gains Tax regime which brought disposals of UK residential property within the UK capital gains tax 

Stamp Duty Land Tax & the Purchase of Residential Property

Stamp Duty Land Tax and the Purchase of Residential Property – The Facts, New Rates & Reliefs Stamp Duty Land Tax (SDLT) is payable on the purchase of a major interest in land or property in England and Northern Ireland (similar, yet different taxes apply in Wales and Scotland). SDLT 

Draft Finance Bill 2019/20: PPR Changes – New Rules

Draft Finance Bill 2019/20: Changes to Principal Private Residence Relief The Government published draft clauses to be included in the Finance Bill 2019/20, together with related consultations and response documents, on 11 July. The draft legislation includes provisions changing key aspects of principal private residence relief and lettings relief and 

Non-UK Resident & Offshore Property Companies: 2019/2020 Forthcoming Changes

Offshore Companies & Non-UK Resident Property Companies: Owning Commercial & Residential Property… The Forthcoming Changes April 2020. Non-UK resident companies with UK property income are subject to income tax rather than corporation tax under the non-resident landlord scheme. From April 2020, such companies will be charged to UK corporation tax 

Here to help

ETC Tax work with private individuals, companies, pension funds and private equity funds to deliver effective tax planning of their property assets while meeting HMRC compliance requirements.

We have extensive experience of advising both property investors and developers on all aspects of property tax and structuring, such as Stamp Duty Land Tax (SDLT), VAT and capital allowances.

This includes in-depth knowledge of the commercial and tax drivers affecting property ownership, and related exposure to Inheritance Tax (IHT) and Capital Gains Tax (CGT).

Our experience covers both residential and commercial properties in sectors ranging from leisure, tech, health and construction.
We have particular expertise in advising property investors and buy to let landlords on how to structure their portfolios and how they are affected by changes such as the phasing in of a reduction in income tax relief on finance costs, which commenced on 6 April 2017.

Our specialist property tax advisory services also encompass non-UK domiciled individuals and non-UK residents, who have arguably suffered even more over the years at the legislator’s hand than those based in the UK.

Our advice for UK and cross-border investors and developers of UK property ensures that ownership structures are tax-efficient and meet the commercial needs of your business.

We also offer specialist experience in large-scale overseas property developments, and have recently provided tax advice on creation an investment structure for a US hotel complex looking to raise capital and targeting UK resident investors.

We have also been involved in the process of setting up a Real Estate Investment Trust (REIT), which is to be listed on the Channel Islands Stock Exchange.

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