Buying and owning a home
Individuals planning to buy a home in the UK should consider:
1.How to fund the purchase, and
2.Whether to own personally or via an SPV.
In all cases, it is critical to fund the purchase tax efficiently and non-domiciled individuals (“non-doms”) should normally avoid the use of offshore income or gains in the UK, for example.
Where appropriate, our advice will seek to ensure the funding and ownership structure is right, we will consider:
- The impact of the remittance basis for non-doms;
- Offshore mortgage arrangements;
- Personal ownership and the implications of other ownership structures appropriate for non-doms, including offshore trusts and offshore companies;
- Capital Gains Tax ("CGT") applies in certain cases when an asset is sold for more than it was originally purchased. The taxable gain (profit) may be triggered following the transfer of an asset, although commonly this would follow a sale. A number of tax reliefs are available to exempt or reduce the tax that may apply. Basic tax planning may... More implications, in particular “principal private residence relief”;
- Inheritance Tax (IHT) implications;
- The impact of Stamp Duty Land Tax (SDLT);
- Planning opportunities to mitigate exposure to SDLT.
These areas can be complex and detailed tax advice should be taken to avoid any “pitfalls”.
If you own a UK property via an offshore trust or company it is important that you seek specialist advice regardless of your domicile or country of tax residence. Please see our commentary on the Annual Tax of Enveloped Dwellings for further information.
Please contact us if you would like us to consider how these proposals affect you or your clients.
When seeking to establish or expand a property business, the tax treatment should be a prime consideration.
In particular, it is important to consider whether it is appropriate to set up a specific vehicle for such a venture.
Our advice will seek to ensure you are aware of all the options available and we will consider:
- The various alternatives (company, partnership, LLP etc.) which may be desirable depending on the turnover, funding requirements etc. of the business;
- The commercial considerations, e.g. limitation of liability, should be borne in mind alongside the tax considerations;
- Exposure to income tax (up to 45%) and capital gains tax (currently up to 28%);
- Particular issues with regards capital transactions being subject to income tax – where there is an intention to develop land interests with a view to a profit;
- The impact of the restriction to mortgage interest relief.
Our team is experienced in the tax implications of owning property interests and can help in mitigating the UK tax exposure as appropriate. Please contact us to speak to one of our advisers.