Spring Budget 2020: Non-UK Resident Companies with UK property income now subject to Corporation Tax

Currently, non-UK resident companies that own UK rental properties are subject to UK income tax at a rate of 20% of taxable profits and are required to submit a self-assessment tax return by 31 January following the end of the tax year.

From 6 April 2020, these companies will be instead be liable to corporation tax and required to file a corporation tax return. While the corporation tax rate is 1% lower (at 19%), this change also means corporation tax rules such as loan relationships, corporate interest restriction and the carry forward loss restriction will now apply with potentially adverse consequences for some property businesses.

Transitional rules apply for periods straddling 6 April 2020 and for companies who disposed of their property in the 2019/20 tax year.

What should you do?

These changes mean that most offshore fiduciary service providers who do their own SA700 Returns will either need to engage a Corporation Tax specialist or invest internally.

Non-resident companies affected by these changes will need to consider both the commercial and compliance impacts of these changes.

Read more on the Budget here.