Non-resident corporate landlords transition from income tax to corporation tax
Non-resident corporate landlords transition from income tax to corporation tax
Mon 03 Feb 2020
HMRC has published guidance for non-UK resident companies currently subject to UK income tax in respect of UK property income. Those companies will be transitioning to the UK corporation tax (CT) regime from 6 April 2020.
Note that existing authorisations for tax agents dealing with such companies will not be valid once those companies transition to CT. Corporate non-resident landlords (NRLs) will be automatically registered for corporation tax and should be receiving a corporate tax identification number from HMRC.
There are a number of different aspects to the operation of the tax rules for corporation tax compared to income tax, particularly in respect of tax deductions for financing costs. For further advice on the transition to corporation tax for corporate NRLs, please get in touch with a member of the Mazars corporate tax team.
Transitional rules
Any cumulative loss as at 5 April 2020 will be carried forward into the corporation tax regime and may be off-set against future profits from the same UK property business or any non-trade loan relationship profits relating to that UK property business. This type of loss is used in priority to any losses made on or after 6 April 2020 under CT and is not affected by the loss carry forward restriction rules. Capital allowances pools continue to roll forward and no balancing charges or allowances are recognised on the transition to the CT regime.
The company’s first accounting period subject to CT will begin on 6 April 2020 and will end on the first date to which the company’s accounts are drawn up to after the date. This means that any profits generated prior to 6 April (and any capital allowances accrued to that date) in that accounting period will still be subject to income tax rules.
The company will become subject to the usual rules relating to tax payments and quarterly installments applicable to companies. However, quarterly installments will not apply for the first accounting period that a corporate NRL moves from the income tax regime to the corporation tax regime.
Action required following HMRC review of off-payroll working in the private sector
HMRC has now concluded its review into the implementation of the off payroll workers legislation from 6 April 2020. As anticipated, no delay has been announced and the legislation will take effect from 6 April 2020. In order to ensure a ‘smooth’ implementation the following announcements have been made by HMRC: HMRC will not issue any […]
Non-resident corporate landlords of UK property need to consider their UK corporation tax obligations
For non-resident corporate landlords gains on all UK property (whether residential or not) will be subject to corporation tax on chargeable gains from 6 April 2019. From 6 April 2020 non-UK corporate landlords of UK property will be within the charge to UK corporation tax on their rental profits, instead of income tax. This will mean […]
Be aware of the HMRC Employment Status questionnaire!
If you have 50 employees or more, you are likely to receive the following from HMRC as they begin their knowledge sharing of the off-payroll changes for medium and large organisations in the private sector effective from April 2020: a questionnaire to complete; and an opportunity for an educational telephone discussion with HMRC. These are […]
The State of Status – The Finance Bill and Off-Payroll Working in the Private Sector
The Finance Bill was published on 11th July. It was eagerly anticipated, mainly due to an expected update on how the off- payroll working rules introduced to the public sector in April 2017 were to be extended to the private sector, following the recent consultation. So what happened? Despite rumours and parliamentary questions seeking a […]