1. Non-resident landlord taxation and accounting services
There are added tax rules to worry about if you are a non-resident landlord owning a UK property.
Rule changes over recent years have made it more difficult to navigate taxes and the changes have also added an administration burden. The administrative burden could range from a non-resident company having to submit to HMRC a set of iXBRL accounts and corporation tax return or a non-resident company, having a one-month window to submit an ATED return, and pay a possible tax charge.
Other changes include a 30-day window for reporting gains and losses and paying the tax on disposal of certain types of property.
With the abundance of rule changes it is quite easy to miss a deadline and suffer penalties for a late submission of a return or late payment.
Telic can help with this as part of our non-resident landlord taxation and accounting service. Your accounting needs will be looked after and the HMRC deadlines managed, so that you can avoid unnecessary penalties.
The income from UK property received by these companies has always been subject to income tax and reportable on an SA700 Tax Return; however, from 6 April 2020, such income became chargeable to corporation tax (reportable on a CT600 and computation).
Complex rules, such as the limitation to corporate interest expense deductibility and sideways loss relief, require to be considered under the new tax regime.
Previously when an SA700 Tax Return was filed, a set of the accounts for the company did not have to be prepared and/or filed with HMRC as part of the overall submission.
However, under the Corporation Tax regime, UK Law requires businesses to submit accounts to support their CT600 when filing it online, alongside the tax computations for the period.
UK Corporation tax returns and computations must be filed using inline Extensible Business Reporting Language (iXBRL).
iXBRL involves the application of computer-readable tags to business data. This is a specialist piece of software enabling data to be processed automatically.
De-enveloping a property is when an individual, trust or otherwise decides to directly own a property rather than own it through a corporate vehicle normally registered in a tax-free or low-tax jurisdiction.
The ‘historic’ tax benefits of using an offshore company were extremely attractive for both the non-domiciled UK based community and foreign based investors wishing to purchase UK property.
However, over time these tax friendly benefits have eroded away. Most recently residential property held by a company worth over £500,000 is susceptible to an annual tax charge known as ATED (Annual Tax on Enveloped Dwellings), and this ranges from £3,700 to £237,400 per annum.
For ATED purposes, the valuation of a property is assessed every five years with the next valuation due on an assessment date of 1 April 2022.
If you have any questions or need further advice in this area, please get in touch and we will be happy to discuss further