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Tax

Non-resident landlords move to corporation tax

6 April 2020 brought further changes to the taxation of UK property as the UK government continues its effort to level the playing field between UK and offshore investors. This latest phase of measures transitions non-resident companies, that carry on a UK property business or have other UK property income, often referred to as Non-resident Landlords (NRLs), from the UK income tax regime to the UK corporation tax regime.

While this brings a reduction in the current applicable tax rate from 20% to 19%, the changing landscape means that NRLs now face heavier compliance burdens and a raft of more complex rules which can significantly impact the overall effective tax.

Investors and fund managers are likely to have questions on the new changes, particularly around the tax efficiency of financing structures and utilisation of any brought forward losses. Determining whether restructuring can optimise the position will be key.

Early evaluation of the changes can help NRLs assess how these rules impact the tax position of their investment structures and ensure reporting deadlines and compliance obligations are met.