The latest tax considerations for owners of UK property

Residential property disposals

If you’re non-UK resident, since 6 April 2015 you’ve been required to report and pay Capital Gains Tax (CGT) on disposals of UK residential property within 30 days of completion, irrespective of whether you have CGT to pay.  From 6 April 2019 the scope of this legislation was widened to include direct and a range of indirect disposals of all UK land and immovable property. 

If you’re UK resident, from 6 April 2020 you’ve been required to report sales of residential property within 30 days of completion but only if there is CGT to pay (in contrast to the non-UK resident case). You still have to report the disposal on your Self-Assessment Tax Return.  

From 27 October 2021, HMRC extended the original reporting and payment deadline of 30 days to 60 days for any disposals completing after this date.

Rental income

HMRC has been working on a number of digital initiatives that give them the ability to cross check what you report on your Tax Return with organisations, such as the land registration, and information passed along from companies, such as Airbnb. Technology and the sharing of information are continually extending their scope, so please ensure that you’re aware and comfortable that all your income has been disclosed.

Rental expenses

From 6 April 2017, HMRC has slowly been restricting the relief available for mortgage interest paid when calculating taxable property income for individuals. From 6 April 2020, no deduction is available to you for mortgage interest paid when calculating taxable rental profits. Instead, HMRC allow relief for mortgage interest paid as a basic rate (currently 20%) tax credit only.

Companies are not subject to this restriction and can have relief within the corporation tax computation for mortgage interest paid, in order to calculate the overall company taxable profits. 

Annual Tax on Enveloped Dwellings (ATED)

ATED imposes a charge on companies (or “non-natural persons”) owning UK residential properties based on the value of the property at pre-determined valuation dates. The ATED charge for the most recent period (2022/23) ranges over bands from £3,800 for properties valued between £500,001 and £1,000,000 at 1 April 2022, to £244,750 for properties valued at over £20million at 1 April 2022. 

The valuation date will be 1 April 2022 for the 2023/24 ATED period, with any ATED charges for that period payable between 1 April 2023 and 30 April 2023.

There are certain exemptions from the charge; however, the annual compliance burden still remains for companies exempt from the charge. 

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