Structuring the acquisition of residential property used to be relatively simple, however, this has changed over the last few years. Discover why it is essential to review your tax position in advance of the changes. Our RSM experts can help you protect your wealth when acquiring property.
Structuring the acquisition of residential property used to be relatively simple, however, this has changed over the last few years. The rate of stamp duty land tax can be up to 15 per cent on residential property. There are however opportunities to reduce this to four or five per cent through bulk purchases or acquisitions with commercial property .
The rate of inheritance tax is currently 40 per cent. From April 2017 inheritance tax was extended to non-domiciled individuals indirectly holding residential property. Careful planning is therefore essential in order to protect family wealth when acquiring property or considering passing it down to another generation.
As of April 2017 interest relief on buy to let has begun to reduce from 45 per cent to 20 per cent. This has meant that corporate ownership has become preferable for high net worth individuals wishing to build up a property portfolio.
Over the next couple of years, there is further change for non-resident investors. From April 2019, capital gains on commercial buildings will begin to be subject to UK tax . From April 2020, non-resident companies will be subject to UK corporation tax rather than the current income tax regime. This will add complexity to their tax compliance. It is therefore recommended that they review their tax position in advance of the changes.