The latest set of changes, which come in to force on 6 April 2020, will impact on non-UK companies which own and rent out residential and non-residential properties in the UK, according to accounting and tax advisory firm Blick Rothenberg.
The firm’s head of corporate tax, Genevieve Moore, said: “The taxation of UK residential and commercial property has been transformed over recent years, impacting on UK and non-UK resident individuals and companies.
“With effect from 6 April 2020, non-UK resident companies that carry on a UK property business will be charged corporation tax in the UK, rather than pay income tax on their profits. This change will align the treatment of resident and non-resident corporate landlords but is likely to increase the tax liabilities of the largest non-resident landlords.”
She added: “Whilst the headline rate of corporation tax is lower than the basic rate of income tax in the UK, and therefore the change will be welcomed by some landlords, the calculation of taxable profits under corporation tax rules is different than under income tax rules, so there will be winners and losers from the change in regime.”
Moore gave an example: “Crucially, once the non-resident corporate landlords are subject to corporation tax, rather than income tax, they will be subject to the “Corporate Interest Restriction” (CIR) rules. These rules, which only apply to companies, restrict the amount of tax relief that can be claimed for interest.