Non-Resident Corporate Landlord
Offshore Companies having property(s) in the UK and receiving rental income will be taxed under corporation tax rule from 6 April 2020.
From 6 April 2020, non-resident companies with income from UK property will no longer be taxed under income tax rules but will be subject to corporation tax. The realignment is to equalise the tax treatment of resident and non-resident companies receiving UK property income.
While the corporate tax rate is 17% compared to 20% income tax rate it also brings non-resident companies into a complex corporation tax regime. The treatment of finance costs will fall under the loan relationship rule for corporate tax debt. Heavily geared company with large shareholders loan may see the interest deduction capped under the thin capitalisation rules as well having to comply with transfer pricing rules.
Under income tax rules as long as the expense is incurred wholly and exclusively for property business a deduction is available. Losses can carried forward and relieve against future rental profit.
Under the corporate tax rule a large company with loss of £5,000,000 will have restriction imposed on offsetting carried forward loss, capped at 50% for relief.
In a group situation losses can be surrendered/ offset against the profit of UK members of the corporate group. However restrictions will apply if the loss has been utilised in the local territory.
109B High Street
Herts HP1 3AH
Tel: 01442 242491
If you have an enquiry or wish to make an appointment please contact us:
01442 24 24 91