Upcoming Tax changes for non-resident company landlords

If you are a UK property landlord, using a non-UK company, then there are a number of changes that will affect your UK tax affairs that you need to be made aware of.

What is changing?

Currently, non-resident company landlords (NRCLs) see rental profits taxed at a flat 20%, with no electronic method of making submissions, a ‘wet signature’ approval of an SA700 return needing to be mailed to HMRC.

Following a consultation process, this is set to change from April 2020, with these companies instead coming under the corporation tax umbrella, leaving these profits subject to tax at 19% instead.

It is expected that HMRC will be writing to all NRCL’s from now, to let them know of their new Corporation Tax Unique Tax Reference (CT UTR), and listing the actions needing to be taken straight away and those that can be performed later.

Actions Required

HMRC has advised that the following actions will need to be taken (with guidance provided with an overview of the more common changes set to be published):

  • To tell HMRC if the NRCL:
    • Already has a Corporation Tax Unique Tax Reference
    • No longer lets out UK property
    • Completes a different tax return that is NOT a non-resident company income tax return.
  • To tell HMRC in writing if the NRCL prepares its accounts or financial statements to a date different to 5 April as the Corporation Tax record will be set to a default accounting period which will end on 5 April 2021.
  • To register with HMRC online services for Corporation Tax submission.
  • To update an agent authority in place to include Corporation Tax if applicable.


Going Forward

The changes could lead to potential liability increases, not only with regards to tax, but additional fees for the preparation of accounts, compliance with HMRC and companies house, so the time and cost burden has the potential for being much heavier for all than under the current system

As specialists in the area of non-resident landlords, from annual tax returns, to Stamp Duty Land Tax planning, we are equipped to assist with any queries you may have, so get in touch should your company be affected by these changes, and we will be able to assist with a smooth transition into the new system.

Please contact Adam Wingrove (awingrove@garbutt-elliott.co.uk), who will be able to assist in the first instance with any queries you have.