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Property Tax

Property Tax

If your business owns land or property, then it is important to consider your responsibilities with respect to reporting income and/or gains received and paying any tax due.

By taking pro-active advice, you may be able to reduce your business’ tax bill.

Rental Income
Stamp Duty Land Tax
Annual Tax on Enveloped Dwellings
Sale of Property
If your business receives rental income from a tenant, either from UK or overseas property, then it may be subject to tax on its profits and be required to report the income to HMRC.

We have assisted many clients in identifying allowable expenses and helping them reduce their tax bills.
SDLT applies on the purchase of interests in land in England and Northern Ireland (Scotland and Wales have their own Land and Buildings Transaction Tax – not covered here).

With recent changes to SDLT and the introduction of the 3% surcharge, many taxpayers are finding it increasingly difficult to determine if and how much SDLT they may have to pay.

PD Tax can help you understand what reliefs and exemptions may be available to ensure that your business does not face an unexpected and unwelcome tax bill or overpay tax unnecessarily.
ATED is an annual tax charge levied on corporate entities (companies and partnerships with a corporate member) which own high-value residential property in the UK.

It’s important to note that there are a number of reliefs and exemptions available, such as where the property is let out on a commercial basis or where the property is a farmhouse used as part of a working farm.

The current year rates can be found on the HMRC website.

All corporates with properties within ATED must submit an ATED annual return, even if a relief applies. PD Tax can help identify any relevant reliefs or exemptions and assist with the preparation of returns.
If you are thinking of selling your business’ property, you may benefit from tax advice prior to the sale to ensure that the sale goes ahead in the most tax efficient way and that all available allowances and deductions are claimed.

In determining the capital gain on which tax may be charged, we will always consider the availability of reliefs, including business rollover relief and the indexation allowance.

If you are selling commercial property, then VAT and capital allowance considerations should also be taken into account.

Stamp Duty Land Tax: Further Reading

Stamp duty land tax (SDLT) was introduced in 2003* and since then has been subject to extensive reform.

SDLT is charged on the purchase of interests in land and is payable by the purchaser. It is calculated based on the consideration paid, and includes not only money but also money’s worth (e.g. the assumption of a mortgage).

SDLT is currently charged on a ‘slice’ basis (like income tax). This means that SDLT is charged at increasing rates for the amount of consideration that falls into the different SDLT bands.

Different rates apply depending upon whether or not the property is residential or mixed/commercial and whether the individual buying the property is an individual or non-natural person (e.g. a company).

Higher SDLT Rates

Since 1 April 2016, all purchases of residential properties have been subject to an extra 3% on SDLT in each band where the purchaser is either:

  • a non-natural person (e.g. a company), or
  • an individual who already has a dwelling and isn’t replacing their main residence.

These new rates are subject to a number of special rules and transitional provisions. Extra care must be taken when considering whether the higher rates will apply as these rules can catch taxpayers by surprise leaving them with unexpected tax bills or having paid the higher rates when they aren’t applicable.

Since 2012, a special rate of 15% on the total consideration paid has applied to the purchase of residential properties by non-natural persons. This special rate is separate to the recent 3% increase to each SDLT band.

The threshold for this special 15% rate was originally set at £2million but from 2014 has been reduced to £500,000.

* From 1 April 2015 land in Scotland is subject to the Land and Buildings Transaction Tax and is not covered here.

Contact us today to discuss your tax requirements.
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