Corporation Tax for Non- Residential Landlords: An Update

In our earlier blogs through 2019, we had detailed on the particular legislation and compliance rules if you own a non-resident company in the UK that attracts rent on the property owned. Those can be a casual read to understand the legislation, but as of 2020, the rules are changing. And we thought we could keep you abreast of the latest developments so you’re not caught off-guard! Instead of focussing on Income Tax as was the case until now, you may have to direct your energies into understanding how the rules have now shifted to Corporation tax.

From April 2020, non-resident companies with income from UK property will stop being charged UK income tax (Capital Gains) and will instead be subject to the UK’s corporation tax regime. Further guidance on this is likely to be released by HMRC soon, but for now, we know that the companies who are liable to pay this tax will have to re-register with them. A few companies are likely to already be under their radar through registration under the non-resident landlord scheme.

Where Do You Start?

A great place to begin would be to check if you even need to read further.
The rules of the new guidance do not apply to you if:

You are not eligible to file a return because your tax has already been deducted under the non-resident landlord scheme

You decide to enter to the UK property market on or after 6th April 2020

You do not file a non-resident company income tax return (SA700)

If you are a Non-resident company though, you may still not be required to register for Corporation Tax if:

your liability to Corporation Tax is wholly offset by the tax removed as part of the Non-resident Landlord Scheme

you have no gains that are taxable for that period

Reading further? Then here’s what you will need to proceed.

Once you register for Corporation tax, you will be sent a Company Unique Taxpayer Reference (UTR). Should you already have one or have not received this by 30th June 2020, contact HMRC.

HMRC has introduced an Online Software to work out and submit your return online through a new platform – HMRC Online Service. You will need to register here too.

If you are using the help of a tax agent or adviser who is acting on behalf of your company, their existing authorisation documents will not be valid once you start paying Corporation Tax.

You will need to submit a new authorisation form to give access and authority for a tax agent or adviser to deal with your Corporation Tax on your behalf. You can facilitate this online or offline though a paper application.

Once you’ve followed these basic foundational steps, you are on your way to be compliant with the latest rules introduced by the HMRC. This move by the HMRC holds particular significance to compliance procedures as it has been observed that they are looking to identify non-resident companies who are not registered under the scheme yet and reign them in for mandatory tax payment. The HMRC’s compliance unit is already sending out notices to the tenants and owners of non-resident company property to this regard.

For an in-depth look at the transitional rules in particular, how to submit and what you will need for a seamless transition, you can always lean on DataTracks. We have helped more than 17,000 clients with their compliance needs in the UK over the last 15 years. Get in touch with us today at enquiry@datatracks.co.uk to start a discussion!