Property Tax Update:
For Accountex 2017
May 2017
Welcome
Who am I?
• Andy Wood
• An experienced tax adviser who regularly advises
entrepreneurs, high net worth individuals and their
families, sports professionals and entertainment
stars and their families on a wide range of tax
matters.
• Andy is a member of:
– the Association of Tax Technicians (ATT),
– Chartered Institute of Tax (CTA); and
– the Society of Trust and Estate Practitioners (TEP).
• Outside of work, Andy enjoys rugby, cricket and
painting.
[email protected]
www.enterprisetax.co.uk
March 2017 seminar
What do we do?
• Specialist tax advisory consultancy
• Primarily work with other professional
advisers providing them with the tax
advisory function they may not possess ‘in
house’
• Enables such firms to enhance their client
offering and, importantly, increase their
potential to generate additional fee income
[email protected]
www.enterprisetax.co.uk
March 2017 seminar
Areas of expertise
• International SMEs – cross border trading, business and
investment
• International families – non-doms and / or non-UK resident
persons
• Reward structures, share schemes and incentive planning
arrangements
• Structuring of a new or existing trading or investment business
• IHT & Estate Planning – including trusts and other family
structures
• Non-UK resident persons investing in to the UK
• Property tax advice – investors and developers
• Value Added Tax
• Enterprise tax reliefs – including EIS, Business Investment
Relief, Research & Development Relief and more.
[email protected]
www.enterprisetax.co.uk
March 2017 seminar
Today’s
agenda
Agenda
• Changes for Investors
• Changes for Owner / occupiers
• Changes for Developers
[email protected]
www.enterprisetax.co.uk
March 2017 seminar
Changes for
property
investors
Charting the pain –investors
April 2015: (1) NR CGT
applies to UK residential
PLUS (2) LBTT in Scotland
December 2014: (1)
Reform to the SDLT rates
April 2016: 3% SDLT
rate for additional
NB – assumes that the ‘letting’
relief from ATED
available and claimed
April 2017: Phased
introduction of
restriction for
landlords
April 2017: IHT
changes for nonholding UK res prop
Timeline in words
• 4/12/2014: major changes to SDLT rates – high value
homes hit much harder by the tax
• 6/4/2015: CGT extended to non-UK resident persons for
certain residential property
• 20/7/2016: non-residential property SDLT– abolish slab
system and top rate increase 3% to 5%
• 1/4/2016: 3% SDLT surcharge for virtually all buy to let
investments
• 6/4/2017: Phased introduction of restriction on interest
relief for individual landlords
• 6/4/2017: changes to IHT for Non-Doms such UK
residential property will not be ‘excluded property
mmm
Specific topics to consider
today
• 3% SDLT rate for additional properties
• Phased tax relief restriction for finance
costs (the infamous Clause 24)
• Non-resident CGT
• Changes to IHT for non-doms
[email protected]
www.enterprisetax.co.uk
March 2017 seminar
SDLT: 3% for additional
properties (1)
• Generally:
– Applied from 1 April 2016
– Where chargeable consideration exceeds
£40k
– Applies to ‘higher rate transactions’
– 3% ‘surcharge’ to the normal prevailing rate
– Only catches purely residential properties
• Main residence:
– Sale of old first
– Purchase of new first
[email protected]
www.enterprisetax.co.uk
March 2017 seminar
SDLT: 3% for additional
properties (2)
• Married couples, Joint purchasers and
Partnerships
• Bare trusts and settlements
• Interaction with Multiple Dwellings Relief
[email protected]
www.enterprisetax.co.uk
March 2017 seminar
Restriction in tax relief for
finance costs
• The law of diminishing returns:
– ‘Taketh with one hand’ – new ITTOIA 2005,
s272A
– ‘Giveth back (after restriction) with other’ – new
ITTOIA 2005, s274A
– Result is the taxation of phantom profit
• Phased in from April 2017 to April 2020
• Applies to:
– Individuals
– Trustees
– Partnerships and LLPs
[email protected]
www.enterprisetax.co.uk
March 2017 seminar
Restriction in tax relief for
finance costs
• Does not apply to:
– Commercial property
– Companies
– Furnished Holiday Lets (“FHLs”)
• A flight to corporate vehicles:
– Why attractive?
– The tax issues
– The commercial issues
[email protected]
www.enterprisetax.co.uk
March 2017 seminar
Non-resident CGT
• Breaks an enduring basic rule (thin end of
wedge?)
• Already some key exceptions
• New rule – NR persons disposing of UK
residential property are taxable
• Any part of a gain arising after 6 April 2015
• Exceptions:
– Diversely held companies / Widely marketed
investment schemes / certain funds
– Pension schemes:
• UK registered schemes – not a good idea
• QNUPs pension scheme – good idea?
[email protected]
www.enterprisetax.co.uk
March 2017 seminar
Changes to Excluded property
for non doms (1)
• Non doms and Inheritance Tax (“IHT”)
– Non deemed dom => UK assets only
– Deemed dom => all assets
• Old excluded property rules
– Non deemed dom settle NUK trust / holding
NUK co
– Underlying UK property
– Outside estate, even if subsequently become
deemed dom
[email protected]
www.enterprisetax.co.uk
March 2017 seminar
Changes to Excluded property
for non doms (2)
• New excluded property rules
– Carve out underlying residential assets with UK
nexus
– Includes:
• Rights held via close company…attributable to UK
residential property;
• Interest in a partnership… attributable to UKRP
• Relevant loans used to finance… [UKRP]
• Important note – rule changes not a general
rule meaning all UK residential property is
subject to UK IHT
[email protected]
www.enterprisetax.co.uk
March 2017 seminar
Recent
changes for
owner
occupiers
Charting the pain – owner /
occupiers
March 2012: 15%
SDLT rate for
corporate
acquisitions
April 2013: ATED introduced
for £2m dwellings
December 2014: (1)
Announced ATED will apply
to £1m then £500k homes
PLUS (2) reform to the SDLT
rates
April 2015: LBTT in
Scotland
April 2016: 3% SDLT rate
for additional properties
April 2017: IHT changes for nondoms holding UK res prop
Timeline in words
•
•
•
•
•
•
•
•
•
•
22/3/2012: SDLT special rate of 15% for purchases of ‘high value’ (£2m)
residential dwelling interests acquired by Companies;
1/4/2013: Annual Tax on Enveloped Dwellings (ATED) introduced for £2m
homes
20/3/14: 15% SDLT corporate rate to apply to £500k properties
6/04/2014: ATED to apply to properties of £1m plus
4/12/2014: major changes to SDLT rates – high value homes hit much harder
by the tax
6/4/2015: Scotland to levy own ‘stamp tax’ called Land & Buildings Transfer
Tax
6/4/2015: CGT extended to non-UK resident persons for certain residential
property
6/4/2015: ATED to apply to properties of £500k plus
1/4/2016: 3% SDLT surcharge for additional properties (second homes / ‘pied
a terre’)
6/4/2017: changes to IHT for Non-Doms such UK residential property will not
be ‘excluded property;
The issues for owner
occupiers
• If held through a corporate vehicle – ATED
• 3% Additional rate (see earlier) to deal
with:
– Replacing main residence
– Pied a terre / holiday homes
• The changes to excluded property for nondoms (see earlier)
• Changes to rent a room relief
[email protected]
www.enterprisetax.co.uk
March 2017 seminar
Changes for
property
developers
Issues for property
developers
• Age old trading v investment issue
• Revised rules on ‘profits from trading in
and developing land’ (“PTDL”)
• End to using certain double tax treaties
(eg Guernsey) for UK property
development
• Revised rules on capital distributions - a
problem?
[email protected]
www.enterprisetax.co.uk
March 2017 seminar
Thank you
[email protected]
www.enterprisetax.co.uk
@EnterpriseTax
Cheshire Office
3 Bridgewater Court, Barsbank Lane, Lymm, Cheshire, WA13 0ER
+44 (0)1925 363 006
London Office
No. 1 Royal Exchange, London, EC3V 3DG
+44 (0)20 3705 8320