Non-resident company landlords – Corporation Tax

If your company is not based in the UK but owns properties in this country which it rents out, it is classed as a non-resident landlord.

Non-resident landlords must now pay Corporation Tax instead of Income Tax.

The Corporation Tax rate for company profits from 1 April 2023 is:

•  25% for companies with profits of £250,000 or more – this applies to all profits
• A Small Profits Rate of 19% for Companies with profits of £50,000 or less
• The main rate will taper in between £50,000 and £250,000

Any non-resident company running a UK property business or receiving UK property income, is liable for Corporation Tax on its rental profits. Any gains arising on the disposal of UK property are also subject to Corporation Tax.

Additionally, if the property is suitable for residential use but is not let out on commercial terms, you may also have to pay Annual Tax on Enveloped Dwellings (ATED).

A number of other recent amendments to Corporation Tax also apply to non-resident landlords including:

• Loss restriction – The annual overall loss utilisation threshold is £5million plus 50% of any profits exceeding £5million.
• Interest restriction – Where net interest expenses are in excess of £2 million, expenses can be restricted to up to 30% of its taxable profits.
• Hybrid restrictions – Payments involving hybrid entities may no longer be allowed under the Hybrid Mismatch Rules
• Management expenses – Management expenses relating specifically to your UK property portfolio are deductible against rental profits with any excess able to be carried forward

How can Midgley Snelling help?

We have experience in guiding non-resident landlords through the transition process and can help you navigate the complex Corporation Tax regime.

As your advisor and tax agent, we can assist you with the authorisation forms required by HM Revenue & Customs (HMRC) providing you with peace of mind that all notifications and payments are accurately submitted, on time, on your behalf.

If you have any credit on your Income Tax account from previous years, we can arrange for this to be repaid to your company.

Equally, if you have any losses from previous years, these can be offset against future profits in certain circumstances. We can explain how you may be able to offset against your future Corporation Tax bill.

To find out how our tax advisers can help you with Corporation Tax, get in touch with us now using the enquiry form below.