How are income and gains from UK residential property taxed?  What taxes do I need to think about for UK residential property?

This is a freeview summary of the various taxes that are relevant for owners of UK residential propery with links to our guides.

Stamp Duty Land Tax: Rate and Reliefs

From 1 April 2016 SDLT is charged at higher rates on the purchase of:

  • An additional dwelling by an individual 
  • A dwelling purchased by a company. 

See SDLT & Residential property (higher rate)

SDLT only applies to properties in England and Northern Ireland; the Land and Buildings Transaction Tax (LBTT) replaced SDLT for properties in Scotland from 1 April 2015. Wales introduced the Welsh Land Transaction Tax (LTT) in April 2018.

Private Residence Relief (PRR)

CGT: non-residents and UK residential property

  • From April 2015 non resident individuals, trustees and companies are subject to tax on gains arising on the disposal of UK residential property.
  • Property values are rebased so that only gains arising since 1 April 2015 for companies and 6 April 2015 for individuals are charged, although acquisition cost can be used if preferred. 
  • All transactions must be notified to HMRC within 30 days; notification is not required if there is no gain and no loss on the transaction.
  • A payment on account of the tax liability is also due within 30 days of completion.

ATED related gains: UK residential property and non-natural persons

  • ATED related gains are no longer applicable after 5 April 2019, Corporation Tax must be considered on any such gains.
  • Residential property that is subject to the ATED annual charge is also subject to UK tax on disposal via the ATED gains regimed prior to 6 April 2019.
  • Companies were subject to Capital Gains Tax at 28% on ATED related gains, rather than Corporation Tax.
  • Only those gains arising whilst a property is subject to the ATED annual charge are ATED related gains.
  • Non-resident companies can be subject to ATED CGT and non-resident CGT on the same disposal; where this is the case ATED CGT takes precedence to avoid a double charge.

CGT: different ways of taxing UK residential property

  • This useful guide summarises in table format the Capital Gains Tax charge on UK residential property for resident and non-UK resident individuals, companies, trusts and other entities

CGT: rates and residential property

  • From April 2016 Capital Gains Tax rates fell to 10% and 20%.
  • These lower rates will not apply to residential property gains which will continue to be taxed at 18% and 28%.

Non-resident CGT & UK Residential Property

  • From 5 April 2015 non-residents are subject to Capital Gains Tax (CGT) on the disposal of UK residential property. 

De-enveloping property

  • A company may wish to transfer its residential property to its shareholders, this is known as ‘de-enveloping’.

  • There is no specific tax relief for de-enveloping: the result is that it needs to be carefully planned in order to mitigate tax charges.

Developing your garden and tax
What are the tax consequences of selling my garden for development purposes?

Profits from dealing and developing UK land
A guide to the new rules which replace the old Transactions in Land provisions and extend UK taxation to all profits from trading in and developing UK land, regardless of residence.

UK property and Returning Ex-Pats
For expats owning UK residential property who are considering moving back to the UK, the decision of whether and when to sell their UK property can be a tricky one, as this case study shows.

 

 

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