Non-resident landlords ― choice of acquisition vehicle

Produced by Tolley
Non-resident landlords ― choice of acquisition vehicle

The following Corporation Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Non-resident landlords ― choice of acquisition vehicle
  • Acquisition by non-resident companies
  • Taxation of rental income
  • Stamp duty land tax and the annual tax on enveloped dwellings
  • Capital gains ― position for disposals made from 6 April 2019
  • Capital gains ― position for disposals made prior to 6 April 2019
  • Acquisition by non-resident individuals
  • Taxation of rental income
  • Stamp duty land tax and the annual tax on enveloped dwellings
  • Capital gains ― position for disposals made from 6 April 2019
  • More...

Non-resident landlords ― choice of acquisition vehicle

Non-resident investors that rent UK real estate are subject to tax on the rental income derived from the properties. The non-resident will also be subject to tax on any gain arising on the eventual disposal of the UK property. The tax consequences vary depending on the choice of vehicle used to acquire the property.

This note considers the UK tax implications where the UK property is acquired by a non-resident that is:

  1. a company

  2. an individual

Regardless of the choice of acquisition vehicle, the UK operates a withholding tax regime for rents payable to non-UK resident landlords known as the non-resident landlords scheme (NRLS). For more information on the scheme, see the Non-resident landlords scheme (NRLS) guidance note.

The taxation of capital gains realised by non-resident investors on UK land or property has changed significantly from 6 April 2019. From that date, all disposals of UK property by non-residents (commercial or residential) are brought within the scope of UK tax. This includes direct disposals of UK commercial and residential land as well as disposals of interests in certain entities which derive 75% or more of their gross asset value from UK land. Prior to April 2019, it was generally only direct disposals of residential property that were subject to tax. These are briefly discussed below. For more information, see the Overview of the rules on disposals of interests in UK land by non-residents guidance note.

It is also worth noting that if the property is commercial, the NRL will need to consider whether the company should register for VAT. For VAT purposes, the UK VAT rules will apply as normal, as the property is sited in the UK even though the property owner is not UK resident. See the TOGC ― land and property and Business compliance ― VAT registration guidance notes for more information.

Acquisition by non-resident companies

Taxation of rental income

Prior to 6 April 2020, all NRL (including both companies

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