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Non-resident landlords moving to corporation tax

Non-resident landlords moving to corporation tax

Addressing some of the practical aspects of the move to UK corporation tax for non-resident landlords.

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Andy Pyle

Partner and Head of Real Estate

KPMG in the UK

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From 6 April 2020, non-UK companies owning UK property will become subject to UK corporation tax (CT), an ever evolving and increasingly complicated set of tax laws. In this publication, we hope to address some of the practical aspects to help tax payers get ready for the change and outline the potential implications to a non-resident landlord’s (NRL) ongoing effective tax rate.

With the move to corporation tax rapidly approaching, NRLs should look to assess the impact of the transition sooner rather than later and consider whether their current investment structure is the best structure to operate going forward.

As it stands, a NRL is currently subject to a headline income tax rate of 20 percent. For profits earned on or after 6 April 2020, the rate will change to the applicable CT rate, which is currently 19 percent. However, there are a number of provisions which seek to restrict the deductibility of expenses that would otherwise be deductible for income tax purposes.Therefore, it is likely that the tax liability of a NRL will be higher under CT than it is currently.

Please do not hesitate to contact our Real Estate tax team or your usual KPMG contact if you would like to discuss further.

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