Tax Charges for Residential Properties
Since April 2013 an annual tax charge has applied to UK residential property held by ‘non-natural persons’ – notably a non-resident company.
There has been little comment about the fact that the annual charge would be index linked (whilst the tax bands would not) and so, in what will now be a regular event, the new charges have now been announced.
The legislation itself – known as the Annual Tax on Enveloped Dwellings (ATED) – imposes a higher Stamp Duty Land Tax charge on acquisition and can levy an annual tax charge on the property,as well as a Capital Gains Tax charge on eventual disposal. Since introduction, it has affected properties worth more than £2 million as at 1 April 2012, or acquisition if later. The ATED threshold is also to be reduced to £500,000 over the next two years so many more properties will come to face the rules.
The ATED legislation is a clear indication of the Government’s view on these type of structures, and its wish to reduce the use of them.