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Non-resident property tax returns

Recent legislation changes from HMRC have been announced which affect non-UK companies that own UK property. From 6 April 2020, these companies will be subject to corporation tax. This is a change from regulations previously when they could be processed as a self-assessment return.

The change is by the government aiming to make taxes fair for both UK and offshore investors, hoping to align resident and non-resident corporate landlords.

Non-resident landlords need to assess how much of an impact the transition will have on them, and this will need to be completed sooner rather than later.

If this change is relevant to you, you will likely be familiar with the Self Assessment document, SA700, that needs to be filled in by paper by the 31 of January, following the end of the tax year, the Corporation File, CT600, is different as it is an online filing.

Any tax liability is required to be paid nine months and one day after the year end date. To put it simply, the CT600 filing deadline would be 5th April 2021 and the liable tax would have to be paid by the 6th of January 2022.

Although the change will be complicated, it isn’t all bad, and with the help of a professional, it doesn’t have to be difficult. The SA700 return is charged at the income rates of 20%, but with the new CT600 tax rate, all profits are taxed at 19% (at present).

The headline rate of corporation tax being lower than the basic rate of Income Tax in the UK, the change will be welcomed by many, however the calculation of taxable profits under corporation tax rules are different. So there will be winners and losers from the change in regime.

If you are already registered with HMRC as a non-resident landlord, you should have received a letter with your new corporation tax reference number and you will be regarded as already having notified HMRC of your corporation tax chargeability.

The changes will also affect non-UK resident companies that receive rental income from UK real estate.

Our accounting team have an extensive background in tax and can assist you throughout the change to make sure you submit your filing whilst optimising your tax situation by reviewing your property portfolios.

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