The Government has introduced new rules this year, affecting the tax treatment of residential UK properties worth over £2m which are held by companies. These charges will affect those holding, buying or selling such properties. The charges will apply where the property is held either through a company, a partnership in which one of the members is a company or a collective investment scheme and are referred to in the rules as ‘Non Natural Persons’ (NNPs).
Charlene Rimmer, Conveyancing Executive, says “The rate of Stamp Duty Land Tax (SDLT) where high value property is purchased through a company has been increased to 15%. This applies only to a single residential dwelling and its’ land worth £2m and not to a housing development collectively worth over £2m. The rate for an individual (as opposed to a company) buying a high value property is 7%, previously 5%.”
A capital gains tax charge will come into effect in April 2013 when a high value property is sold by non-resident NNPs. This proposed tax will concern those individuals who live in a property owned by a company in which they have an interest. Usually such companies would be off-shore and therefore not liable for this charge. However, if the owner of the company is a UK resident then he can be taxed directly regardless of his domicile. The government are proposing to change the rule of no CGT for a non-resident company selling a high value property so that a non-UK company or trust will be taxed directly.
The proposed increases are:
Property value £2m to £5m £5m to £10m £10m to £20m Greater than £20m
Annual charge £15,000 £35,000 £70,000 £140,000
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