1. What does the draft Finance Bill 2018/19 say about the treatment of UK property held by non-UK residents?
From April 2019, gains subsequently arising on any UK property, including commercial and residential property, will be chargeable to UK tax. The existing exemption for the disposal of residential property that is diversely held will be removed but the Annual Tax on Enveloped Dwellings (ATED)-related capital gains tax will also be abolished.
In addition, gains arising to non-UK residents on the disposal of shares, which derive their value from UK property, will also be taxed where certain conditions are met.
From 6 April 2020, the Finance Bill confirms that, those companies currently liable to UK income tax on rental income – ie non-resident landlords, will fall within the scope of UK corporation tax on such income.
2. What points in the original HMRC Consultation remain outstanding?
The treatment of Collective Investment Schemes remains an area of uncertainty. The UK Government is reviewing consultation responses to decide how to, principally, treat tax-exempt investors.
Two alternative proposals have been suggested:
- Introducing an election regime such that non-UK resident investors benefit from tax transparency in the offshore fund or
- For offshore funds that are non-closely held, electing that gains in the structure are not taxable but a disposal of the interest in the fund will be taxable.
Option B would only be available when the fund agrees to certain reporting requirements.
There is widespread concern that there is very little time for draft legislation to be made available to stakeholders, comments incorporated and final legislation to be released.
3. What are ‘land-rich’ companies?