Since 6 April 2020, Non-UK resident company landlords have become liable to Corporation Tax (CT) on profits from UK property, instead of Income Tax. HM Revenue & Customs have automatically registered these companies with ongoing property businesses as of 5 April 2020 for Corporation Tax, and will have issued a new Unique Tax Reference (UTR).
As an incorporated business for Corporation Tax purposes, the filing requirements will have changed. You must now report the property income and expenses on a Corporation Tax Return (CT600), complete with an iXBRL formatted set of accounts.
The first accounting period for Corporation Tax, will initially be set to start on 6 April 2020 and end on 5 April 2021. The filing deadline for a CT Return will be 5 April 2022, with any tax liability due to be paid by 6 January 2022. If more suitable, you can shorten or extend your accounting period (with a limit of extending once in a five year period).
If you expect your company to have other UK income that remains chargeable to Income Tax after 6 April 2020, you will need to continue making Income Tax payments on account. However in most cases it is likely that Income Tax liabilities will be reduced or eliminated, so you should consider making a claim to reduce any payments on account due in the next 12 months.
If your UK property business has cumulative losses, these will be carried over to your Corporation Tax record if the business is continuing. The losses can be offset against future profits from the same UK property business, but not against Capital Gains where your company may be chargeable to Corporation Tax.
There are some exceptions to the above guidance, so it is important to seek advice on your situation.
If you started a UK property business through a non-UK resident company on or after 6 April 2020, you will be required to notify HMRC that you need to pay Corporation Tax – you will not automatically be registered. Transitional rules will not apply in this case as they do for those with existing businesses as at 5 April 2020, and profits or losses are calculated using normal CT rules.
You will not be required to notify chargeability to Corporation Tax for an accounting period if both of the following conditions are met:
- your company’s liability to Corporation Tax is fully offset by tax deducted under the Non-resident Landlord Scheme
- your company has no chargeable gains
If you are a Non-UK Resident landlord, needing guidance or support with the new rules, please do get in touch. We can provide a service to prepare and complete the iXBRL formatted accounts to ensure you remain compliant, or help you to determine whether or not you are required to register for Corporation Tax.
Please contact Rachel on rachel.roberts@randall-payne.co.uk or call on 01242 776000 for further information.
