The following Tax practice note Produced in partnership with James Meakin of Dentons provides comprehensive and up to date legal information covering:
Tax is a key consideration when selecting an appropriate structure for holding UK commercial property. The most common form of investment in UK commercial property is the UK incorporated and tax resident limited company. For non-UK investors, the trend where property is held for investment purposes has very much been towards offshore ownership through a non-UK resident special purpose vehicle (SPV). Following changes to the taxation of gains made by non-UK residents on UK immovable property from 6 April 2019 and to the taxation of property income for non-UK companies from 6 April 2020, it remains to be seen whether this will remain the case.
This Practice Note summarises the UK tax considerations for both a seller and a buyer on the sale and purchase of a limited company SPV holding a commercial UK property. Specifically, it focuses on the differences between acquiring the shares in an SPV, rather than the underlying property asset, the consequences for the seller on the disposal of shares in the SPV and the issues that will be relevant for a buyer and that a buyer should address in its tax due diligence on the SPV.
This Practice Note does not consider:
the UK tax issues that could arise on the disposal of more widely held property holding vehicles (such as unit trusts, REITS, PAIFS or partnership interests—for further details on
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This Practice Note explains certain common financial covenants used in commercial finance transactions including:•minimum net worth test•gearing ratio•leverage ratio (or debt to equity ratio)•current ratio (or acid test ratio)•cashflow ratio•interest cover ratio, and•loan to value ratioIt explains:
BREXIT: UK is leaving EU on Exit Day (as defined in the European Union (Withdrawal) Act 2018). This has an impact on this Practice Note. For further guidance on the impact of Brexit on e-money requirements, see Practice Note: Impact of Brexit: Payment services and electronic money directives—quick
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