UK residential property – time for private clients to review ownership structures December 2017 www.pwc.co.uk Summary The UK has introduced multiple changes to how residential property is taxed. Therefore: • If you are considering buying a residential property in the UK, now is the time to consider how this should be owned (for example, personally or via a structure). • If you already own UK residential property within a structure, reviewing your current tax position would be beneficial. What has changed? Annual Tax on Enveloped Dwellings (ATED) Residential property that is owned by a company could be subject to annual ATED charges ranging from £3,500 to £220,350. Non-resident Capital Gains Tax Since April 2015, UK residential property owned by a non-UK resident has been subject to Capital Gains Tax at rates of up to 28%. Stamp Duty Land Tax (SDLT) Changes to the law have resulted in a progressive application of SDLT with rates reaching 15% when purchasing UK residential property. Inheritance Tax (IHT) From April 2017, UK residential property ownership will bring property owners (including trusts) and in certain cases, property finance providers, within the scope of UK IHT regardless of how the ownership of the property is structured. 2 What is the issue? Historically, UK residential property has typically been held by non-UK investors through offshore structures, which has provided an element of privacy for the owner and tax efficiency, for example, regarding Inheritance Tax and Capital Gains Tax. Since 2013, major tax changes have been introduced resulting in these structures being potentially less tax efficient. 1 Who to contact? This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers LLP, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. © 2017 PricewaterhouseCoopers LLP. All rights reserved. In this document, “PwC” refers to the UK member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/ structure for further details. 171130-170551-PH-OS How can we help? Our private client team has the in-depth technical expertise to provide advice on your UK residential property needs and assist you in achieving the best outcome. What’s on the horizon Non-resident landlord companies From April 2020, it is proposed that profits from UK property held by non-resident companies will be in the charge to corporation tax. This may increase taxable profits as companies paying corporation tax can incur more restrictions on the amount of interest costs and losses they can offset compared to non resident landlords subject to income tax. Ultimate beneficial ownership register A public register of the ultimate beneficial ownership of UK residential property has been proposed which would lead to increased disclosure of ownership. 3 Kevin Leaver +44 (0)20 7213 8434 kevin.j.leaver@pwc.com Clare Stirzaker +44 (0)20 7804 2504 clare.r.stirzaker@pwc.com James Pollard +971 (0)4 304 3039 james.pollard@pwc.com

UK residential property - time for private clients to ......The UK has introduced multiple changes to how . residential property is taxed. Therefore: • If you are considering buying

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Page 1: UK residential property - time for private clients to ......The UK has introduced multiple changes to how . residential property is taxed. Therefore: • If you are considering buying

UK residential property – time for private clients to review ownership structures December 2017

www.pwc.co.uk

SummaryThe UK has introduced multiple changes to how residential property is taxed. Therefore:

• If you are considering buying a residential property inthe UK, now is the time to consider how this should beowned (for example, personally or via a structure).

• If you already own UK residential propertywithin a structure, reviewing your current taxposition would be beneficial.

What has changed?Annual Tax on Enveloped Dwellings (ATED)Residential property that is owned by a company could be subject to annual ATED charges ranging from £3,500 to £220,350.Non-resident Capital Gains TaxSince April 2015, UK residential property owned by a non-UK resident has been subject to Capital Gains Tax at rates of up to 28%.

Stamp Duty Land Tax (SDLT)Changes to the law have resulted in a progressive application of SDLT with rates reaching 15% when purchasing UK residential property.

Inheritance Tax (IHT)From April 2017, UK residential property ownership will bring property owners (including trusts) and in certain cases, property finance providers, within the scope of UK IHT regardless of how the ownership of the property is structured.

What is the issue?Historically, UK residential property has typically been held by non-UK investors through offshore structures, which has provided an element of privacy for the owner and tax efficiency, for example, regarding Inheritance Tax and Capital Gains Tax.

Since 2013, major tax changes have been introduced resulting in these structures being potentially less tax efficient.

Who to contact?

This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers LLP, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.

© 2017 PricewaterhouseCoopers LLP. All rights reserved. In this document, “PwC” refers to the UK member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.

171130-170551-PH-OS

How can we help?Our private client team has the in-depth technical expertise to provide advice on your UK residential property needs and assist you in achieving the best outcome.

What’s on the horizonNon-resident landlord companiesFrom April 2020, it is proposed that profits from UK property held by non-resident companies will be in the charge to corporation tax. This may increase taxable profits as companies paying corporation tax can incur more restrictions on the amount of interest costs and losses they can offset compared to non resident landlords subject to income tax.

Ultimate beneficial ownership registerA public register of the ultimate beneficial ownership of UK residential property has been proposed which would lead to increased disclosure of ownership.

Kevin Leaver

+44 (0)20 7213 8434 [email protected]

Clare Stirzaker

+44 (0)20 7804 2504 [email protected]

James Pollard

+971 (0)4 304 3039 [email protected]