6 ISSUES FOR £6 Subscribe to Surrey Life today click here

Key issues in the property landscape to consider in the coming months

PUBLISHED: 11:31 19 December 2016 | UPDATED: 10:19 05 January 2017

Archant

With a raft of recent changes for residential property owners, and more anticipated in the coming months, Edward Emblem of Smith & Williamson, the accountancy, investment management and tax group, highlights some of the key issues to consider.

Smith & WilliamsonSmith & Williamson

Property tends to be a long term investment, but the tax rules can change so quickly that owners can very quickly find their knowledge out of date.


Stamp duty land tax

Since 1 April 2016, a 3% stamp duty land tax surcharge has applied to the purchase of a UK residential property if the buyer already owns residential property in the UK or elsewhere, whether it is for personal use or is let. The surcharge applies if the buyer (or one of the buyers) also owns any interest in another dwelling, with a refund of the surcharge being potentially available if that other property is the buyer’s main residence and it is sold within three years. There are special rules governing trust and company purchases.


Capital gains tax ‘surcharge’ on residential property gains

Capital gains tax (CGT) rates were reduced to 10% and 20% as from 6 April 2016. However, these reduced rates do not apply on the sale of residential property (that does not qualify for private residence relief), where the rates remain at 18% and 28%.


Finance restrictions

From April 2017, there will be a restriction on tax relief for the finance costs incurred on the purchase of residential property (except properties that qualify as furnished holiday lets). Relief will be restricted to the basic rate of 20%, although the rules will be phased in over four years, with the full restrictions applying from 2020/21 onwards. 


CGT for non-UK residents

Non-UK residents (including trusts and companies) who sell UK residential property are now liable for UK tax on gains that have accrued on that property since April 2015. Generally, non-UK residents will need to complete a special tax return and pay any tax due within 30 days of sale. Private residence relief may be available, provided the owner spends sufficient time in the property.


Proposed inheritance tax liability on UK residential properties

From 6 April 2017, all UK residential property, whether held directly or indirectly, is due to be brought within the scope of inheritance tax. This means that, unlike the present position, any property owned by a closely held non-UK company, or trust and company, will be within the scope of the tax.


Annual tax on enveloped dwellings

Annual tax on enveloped dwellings (ATED) is payable by corporate entities that own UK residential property, unless it is let on a commercial basis. The tax was introduced in April 2012 and initially applied only to UK residential properties worth more than £2m, but, since April 2016, all property worth more than £500,000 now falls within the scope.

The annual charge ranges from £3,500 to £218,200 depending on the value of the property, and a special return needs to be filed (even for let properties). It may be worth reviewing existing structures to see if corporate ownership is still the most tax efficient structure.


Profits from trading in and developing UK land

As from March 2016, all profits arising from trading in or developing UK land are subject to UK tax, whether or not these profits are realised by a UK resident entity. This will affect overseas property developers who were previously outside the scope of UK tax, and will affect commercial as well as residential property development.


UK property ownership register

The UK Government has announced its intention to introduce a public register of all non-UK companies that own property in the UK. This register, which will be introduced in 2017, will include details of the beneficial owners and will apply to all foreign companies that already own UK property as well as to new buyers. There will be a consultation on the new register but, although the register is intended to ‘punish and drive out corruption’, we note that it will also have a significant impact on those who value their privacy.


Summary

The breadth of the above changes is vast and the potential impact could be significant. If you own property, it is recommended that you review your position as soon as possible to ensure that you fully understand the impact of the changes, and investigate what steps you may be able to take to mitigate this.


Contact

Edward Emblem, Director, Private Client Tax Services | 01483 407139 | edward.emblem@smithandwilliamson.com | smithandwilliamson.com

Edward EmblemEdward Emblem

.

0 comments

Welcome , please leave your message below.

Optional - JPG files only
Optional - MP3 files only
Optional - 3GP, AVI, MOV, MPG or WMV files
Comments

Please log in to leave a comment and share your views with other Surrey visitors.

We enable people to post comments with the aim of encouraging open debate.

Only people who register and sign up to our terms and conditions can post comments. These terms and conditions explain our house rules and legal guidelines.

Comments are not edited by Surrey staff prior to publication but may be automatically filtered.

If you have a complaint about a comment please contact us by clicking on the Report This Comment button next to the comment.

Not a member yet?

Register to create your own unique Surrey account for free.

Signing up is free, quick and easy and offers you the chance to add comments, personalise the site with local information picked just for you, and more.

Sign up now

More from Homes & Gardens

Monday, September 4, 2017

A restaurateur with a passion for gardening, French chef Raymond Blanc is set to jump out of the frying pan and into the perennials to open the 25th RHS Garden Wisley Flower Show.

Read more
Friday, September 1, 2017

Sash windows are an integral feature of British architectural history, first making an appearance in the late 17th century and continuing to be popular ever since. Whether your property is traditional, modern or rustic, Jack Brunsdon & Son’s sash windows are a versatile and timeless option.

Read more
Friday, July 21, 2017

At Odstock in Bletchingley, Averil and John Trott have developed a real plantsman’s garden over more than 40 years and specialise in dahlias

Read more
Tuesday, July 18, 2017

Keen plantswoman Penny Drew has created a tranquil oasis at Earleywood in Frensham, near Farnham. Leigh Clapp visits to discover more about her award-winning garden

Read more
Wednesday, July 12, 2017

A love of Liberty fabrics and the idea of being able to create something from that fabric motivates designer Amy Hunt of Willa & Bobbin. Janet Donin meets her at home in Reigate

Read more
Monday, June 26, 2017

A look at some of the issues arising in relation to second homes or investment properties

Read more
Tuesday, June 20, 2017

As she continues her ventures out and about in Surrey, this month, bestselling author Adele Parks drags her husband to one of Europe’s best antiques markets

Read more
Tuesday, June 6, 2017

Traditionally crafted wardrobe designs blended with luxury modern style and The Heritage Wardrobe Company go hand in hand as their designers work with you to understand your storage needs

Read more
Wednesday, May 31, 2017

British heritage brand, Jack Brunsdon & Son, understands the importance of exterior design and takes great pride in their unrivalled collection of doors. Each order is bespoke and carefully designed to enhance the architectural integrity and value of your home.

Read more
Wednesday, May 24, 2017

Andy Smith, Surrey branch director of the Campaign to Protect Rural England, takes us to one of Surrey’s most precious, yet undervalued, heritage assets – Painshill in Cobham – and explains why its peace and tranquillity could now be at risk

Read more
Tuesday, May 23, 2017

With a decade of gardening journalism and a host of award-winning landscape designs to his name, Dan Pearson’s latest book is chock-full of insights gained from a successful career at the forefront of global horticulture, which began at the sprawling RHS Garden Wisley

Read more
Tuesday, May 23, 2017

The passing away of well¬known Surrey resident Mary Wondrausch OBE, on Boxing Day last year, created a high demand from those wishing to own a piece of her work. The exhibition of her work at The Watts Gallery in February, subsequently sold out very quickly

Read more
Monday, May 22, 2017

A newcomer to the National Gardens Scheme this year, Shamley Wood Estate is tucked away in the Surrey Hills near Guildford

Read more
Wednesday, May 10, 2017

Self-confessed stationery addicts, Trudi Savin and Sophie Morton, combined their love of block printing with a passion for pattern to create Yateley Papers. Janet Donin meets Trudi in their Reigate studio

Read more
 
Great British Holidays advert link

Newsletter Sign Up

Sign up to the following newsletters:

Sign up to receive our regular email newsletter

Subscribe or buy a mag today

subscription ad
Surrey Life Application Link

Local Business Directory

Surrey's trusted business finder

Job search in your local area



Search For a Car In Your Area

Property Search