We have been busy reviewing the finer details of the recent UK Budget and have found two areas of change that may affect local clients.
Non-resident companies: treatment of UK property income
UK non-resident companies are currently subject to income tax on their UK property income. As previously announced, legislation in Finance Bill 2018-19 will change this so that non-UK resident companies that carry on a UK property business or have other UK property income or gains will be charged to corporation tax.
Draft legislation was published on 6 July 2018. Following consultation, the legislation has been revised to provide further clarity on how the loan relationship and derivative contract rules will apply, and revised legislation published on Budget day. In addition, a targeted anti-avoidance rule is introduced from 29 October 2018. The changes will have effect from 6 April 2020.
Affected companies will need to prepare to submit corporation tax returns and accounts in iXBRL format. The government will issue guidance on the transitional rules as well as general guidance on corporation tax aimed at non-UK resident companies during 2019 and before the change takes effect.
CGT: non-residents disposing of UK land
As announced in the Autumn Budget 2017, CGT will apply to gains made by non-residents on the disposal of any UK land, extending the rules introduced in April 2015 for disposals of residential UK land. The charge will apply to disposals on or after 6 April 2019. Non-resident companies will be liable to corporation tax on their gains.
If you have concerns that the changes may affect you or wish to discuss the impact of the changes further, please contact our office.