UK Use New Tax To Clamp Down On Foreign Property Ownership
London has long been a global honey pot for high-end houses and luxury living, but the capital has attracted increasing numbers of foreign investors in recent years with a myriad of consequences.
Now the UK government has published detailed plans to introduce the world’s first public registrar of the owners of foreign companies which own property in the country as part of its heavy crack-down.
Why is the UK government trying to restrict the foreign ownership of property?
The London property boom left a number of unforeseen causalities in its wake, including the UK citizens priced out of the housing market, the huge amount of revenue lost to tax evaders and the victims of crime syndicates who have been laundering the proceeds of their crimes through the UK property market.
The vast majority of overseas companies that own property in London are registered in tax havens, according to a report by Transparency International UK and Thomson Reuters released late last year.
How do the changes to the UK tax structure affect foreign-owned companies?
The move to quell foreign investment, increase regulation and achieve greater transparency in the UK property market has led to a number of reforms in recent months including:
– Levying a 40% inheritance tax (IHT) on all UK property owned by foreign investors, including those held in company structures, trusts or foundations.
– Plans to bring the taxable income and/or gains from the disposal of certain UK residential property interests within the UK tax regime for the first time, making non-resident companies owning UK property liable to UK capital gains and income tax.
Am I required to register as the owner of a property my company manages?
Firms are already required to register with Britain’s corporate register, Companies House.
The newly proposed register would show the beneficial owners of real estate owned by foreign companies and legal entities. It is important that you speak with a qualified UK tax specialist to understand how this wave of changes will affect you and your business, to avoid paying a hefty tax bill.
If you are unsure if the changes to UK property ownership for foreign investors affects you and your company, or if you would like some advice on how to structure the purchase of new properties in the future, contact:
Karim Ghandour: firstname.lastname@example.org
Craig Brown – TEP: email@example.com
* Disclaimer: We have taken great care to ensure the accuracy of this communication. However, it is written in general terms and you should seek specific advice before taking any action. No responsibility can be taken for any loss arising from any action taken or refrained from on the basis of this communication.
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