francis clark - property sector annual update

Francis ClarkProperty Sector Annual Update

06 October 2015

www.francisclark.co.uk

Chairman’s Introduction

John Endacott

Head of Tax

Francis Clark LLP


Housekeeping


Programme

• Budget and property tax updateHeather Britton, Tax Director

• Succession planning ideas for property businesses

John Endacott, Head of Tax

• Grants and funding updateDavid Armstrong, Corporate Finance Director

Coffee break


Programme

• VAT – Top 7 queries relating to propertyJulie Towers, VAT Partner

• Energy and sustainability Andrew Killick, Corporate Finance PartnerDamian Lannon, Tax Partner

• Dwellings and residential property – Panel discussion Chaired by John Endacott

Lunch

Budget and Property Tax Update

Heather BrittonTax Director


What we will consider

• Restriction of tax relief for ‘buy to let’ landlords

• Tax relief for capital expenditure

• Outlook for furnished holiday lets

• Profit extraction from property companies

Restriction of higher rate relief for buy-to-let landlords


• Finance costs are a tax deductible expense until April 2017

• Gradually introducing “tax reducer” at 20% of finance costs

Introduction – residential property finance costs

Year Finance costs claimed as deductible expense

Finance cost claimed as “tax reducer” at 20%

2017/18 75% 25%

2018/19 50% 50%

2019/20 25% 75%

2020/21 onwards 0% 100%

• Headline impact = only basic rate tax relief achieved


Who is affected?

• Higher & additional rate taxpayers

• Trusts

Unaffected:

• Furnished Holiday Lets

• Let commercial property

• Basic rate taxpayers

• Corporates

Question: who should own residential property?


How the tax reducer is calculated

• Income tax deduction = 20% x lower of:

• Finance costs not allowed as deductible expense

• Rental profits for the tax year

• Finance costs – includes interest & arrangement fees


Example

Take a highly geared landlord with

• Gross rents of £100,000

• Expenses other than interest £30,000

• Interest expense £50,000

• Other income of £11,000


Position 2016/17

Rent 100,000

Expenses (80,000)

Rental profit 20,000

Other income 11,000

Total income 31,000

Less personal allowance (11,000)

Taxable income 20,000

Tax at 20% 4,000


Tax during transition – “highlights”

Tax year Interest expenseallowed

Tax reducer Tax to pay

2016/17 50,000 - 4,000

2017/18 37,500 2,500 4,100

2018/19 25,000 5,000 6,600

2019/20 12,500 7,500 9,100

2020/21 - 10,000 11,600


Possible effects

In this example:

• Landlord has become a higher rate taxpayer

• A high income child benefit charge may be due

http://www.google.co.uk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRxqFQoTCKCnqZ2Cq8gCFYK2FAodfZEAPQ&url=http://www.iconshut.com/red-pound-sign-symbol-icons/dT1hSFIwY0RvdkwzZDNkeTV3YzJReE1EQXVZMjl0TDNkd0xXTnZiblJsYm5RdmRHaGxiV1Z6TDFKbFpXOXZWak12ZEdsdGRHaDFiV0l1Y0dod1AzTnlZejFvZEhSd09pOHZkM2QzTWk1d2MyUXhNREF1WTI5dEwzQndjQzh5TURFekx6RXdMekEwTURFdlVtVmtMWEJ2ZFc1a0xYTnBaMjR0YzNsdFltOXNMV2xqYjI0dE1UQXdOREU1TlRnMU55NXdibWNtWVcxd08zYzlNekF3Sm1GdGNEdG9QVEl3TUNaaGJYQTdlbU05TVF8dXI9aHR0cDovL3d3dy5wc2QxMDAuY29tL3BhZ2UvMTU0MS98dz0zMDB8aD0yMDB8dD1wbmd8/&psig=AFQjCNG13bCTtMAN254p31qFIUDIhR-6Ng&ust=1444123719858935


High income child benefit charge

• If the landlord has 2 children and a student loan

• “Commercial” profit each tax year = £31,000

Tax year Total tax Effective tax rate

Tax rate on property income

2016/17 5,230 16.9% 26.2%

2017/18 6,455 20.8% 32.3%

2018/19 11,153 36.0% 55.8%

2019/20 15,493 50.0% 77.5%

2020/21 19,118 61.7% 95.6%


Additionally…

• Taxpayers being pushed above £100,000 = personal allowance withdrawn

• He/she becomes an additional rate taxpayer

• Consider impact on pension contributions

• From April 2016 reduced annual allowance

• £40,000 tapered down to £10,000 (watch income > £110,000)

• Where tax reducer can’t be used fully – carry forward unused interest

• Major headlines not hit papers yet!

Tax relief for capital expenditure


Wear & Tear allowance

Current rule:

• 10% of “relevant rental amount” can be deducted from profits

• Only available on fully furnished lettings

New proposed rules from April 2016:

• Wear & tear 10% allowance abolished

• No relief on initial capital outlay

• Relief on actual costs of replacements

• Claim on furniture/furnishings, appliances, kitchenware


Who is affected?

• Residential properties

• Unfurnished, part furnished, and furnished properties

• Not applicable to:

• Furnished Holiday Lets (FHLs)

• Commercial properties

• Capital Allowances still available for these properties


Furnishings include

• movable furniture or furnishings, such as beds or suites

• televisions

• fridges and freezers

• carpets and floor-coverings

• curtains

• linen

• crockery or cutlery


Not included ….

• baths

• washbasins

• toilets

• boilers

• fitted kitchen units

Why? Because replacement would be treated as a repair


Annual Investment Allowance - commercial property & FHLs

• 100% deduction for capital expenditure

• April 2014 – December 2015 £500,000

• January 2016 onwards £200,000

• Watch year ends straddling this date

• March 2016 year end – only £50,000 spend qualifies in final 3 months

• January 2016 level better than £25,000 default

• Capital allowances in FHL/commercial property

• Importance on acquisition/disposal

• Properties already held – consider opportunities

Outlook for Furnished Holiday Lets


Furnished Holiday Lets (FHLs)

• Strict letting conditions must be met

• Claim all finance costs as a deductible expense

• HMRC may challenge non-commercial FHLs

• Claim capital allowances (including annual investment allowance)

• Inheritance Tax relief – most will not qualify

Profit extraction from property companies


Dividend taxation changes

When?

• 6 April 2016

Main changes?

• Abolition of dividend tax credit (10%)

• Introduction of new £5,000 “dividend allowance”

• Change in rates at which dividends taxed


Dividend rates

Currently From April 2016 Increase

Basic rate 0% 7.5% + 7.5%

Higher rate 25% 32.5% + 7.5%

Additional rate/trusts

30.6% 38.1% + 7.5%


How does the dividend allowance work?

• First £5,000 of dividend taxed at 0%

• The dividend allowance does not reduce the amount of income subject to tax

• Dividends use up basic & higher rate bands

• No draft legislation published, so detail unclear

• HMRC published factsheet giving brief overview


Basic rate taxpayer

Tom has dividend income of £4,500 each year

What is the impact?

Basic rate taxpayer Higher rate taxpayer

2015/16 Nil (as in basic rate) £4,500 x 25% = £1,125

2016/17 Nil (as < £5,000) Nil (as < £5,000)


Additional rate taxpayer

Will owns shares in a profitable property development company

He extracts £500,000 in dividends per annum

Rate of dividend tax Tax payable

2015/16 30.6% £153,000

2016/17 38.1% £188,595

Extra tax £35,595


Winners & losers!

Winners

• Higher rate taxpayers with dividends < £5,000

• Higher rate taxpayers with dividend income < £21,667

• Additional rate taxpayers with dividend income < £25,400

Losers

• Basic rate taxpayers with dividends greater than £5,000

• Will pay tax in 2016/17

• Previously no tax!

• Low salary and high dividend strategy


Comments – extraction rates

• New dividend rules have eroded tax benefits of incorporation

• Dividends still more tax efficient than salary

• Salary/bonus – wholly & exclusively test if trading

Dividend Salary

Basic rate 26% 40%

Higher rate 46% 49%

Additional rate 50% 53%


Planning points

Consider dividend pre-April 2016

• Loan back to company

• Charge interest on loan

• first £1,000/£500 tax-free from April 2016

• savings rate £5,000 at 0% from April 2015

Who owns the shares?

• Spousal transfers

• Gifts

Entrepreneurs’Relief and JointVentures


Entrepreneurs’ Relief – joint ventures

• Entrepreneurs’ Relief reduces Capital Gains Tax rate to 10%

• Trading includes property development but excludes property rental

• Changes introduced in March 2015:

• Exclude activities carried out by joint venture companies

• Joint venture – parties with < 50% interest in a company

• Impact = only companies with significant trade of their own qualify for Entrepreneurs’ Relief

• Proposed changes have attracted criticism and alternatives are being considered

Budget and Property Tax Update

Succession planning ideas for property businesses

John EndacottHead of Tax


Issues

• The family need to satisfy different family groups

business acumen and risk issues

distribution of the estate (will issues)

• Inheritance tax on death?

• Potential loss of income if business passed on

• Capital gains tax on lifetime gifts

• Between a rock and a hard place?


Property businesses

• Property development/dealing

• Property rental Residential

Commercial

Holiday lettings

Caravans & park homes

• Mixture of activities

• Is it a business for tax purposes?

• Ownership structure – personal/company/trust


Property tax status for companiesProperty Rental Property

DevelopmentProperty Dealing

General tax status INVESTMENT TRADING TRADING

CompanyAccounting treatment

Fixed asset Trading stock Trading stock

Realisations Capital gain (Indexation)

Trading profit Trading profit

ShareholdersCGT:Entrepreneurs’ reliefHold-over relief

X(unless

holiday lets)

IHT:Business Property relief

X X


Assessing qualification for tax reliefs

• 50%+ for business property relief

• 80%+ for capital gains tax reliefs

• Farmer/Balfour tests turnover

profit

capital employed

time spent

overall impression

• Group aspects


Impact of inheritance tax

Value of company, say £10m

Half share (discounted), say £3m

Inheritance Tax at 40% £1.2m

Extracted as dividend (38.1%) £1.94m

Effective tax rate 65%


Tax planning strategies

• Achieving business property relief qualification non-statutory clearance procedure

• Gift of existing value (but capital gains tax)

• Pass on future growth using a trust

re-structuring shares

new property business

• Pension planning (outside fund)

• Mixture of the above


Family planning

• Who’s involved in the business?

• Can a development business be continued? risk profile implications

invest into a property portfolio for maintainable dividends

consider trust ownership

• Shareholder arrangements preference shares for wider family

shareholders’ agreement & tie into wills

family constitution approach

• Split up the group?


Personal property portfolios

• Transfer into trust (but lifetime inheritance tax - 20%)

• Inheritance tax planning easier in a corporate structure

• Consider incorporation impact of interest tax relief restriction

SDLT issues

capital gains tax relief may be available

joint ownership or property business?

is there a partnership?

partial trust ownership possibility

• Borrowing costs and loan complications

Succession planning ideas for property businesses

Grants and Funding Update

David ArmstrongCorporate Finance Director


Contents

• Developers

• Owner / occupiers

• House builders

• State of the funding market

• What makes a good funding application


Developers – what is the current situation?

• GAP funding – what has happened?

• European Programme 2014 – 2020

• Access very limited:

- Workspace Development Grant

- Watch this space – ‘Project Bank’


Developers - what is the current situation?

• UK Government Funding

• Growth Deal - c£200m for projects in line with the HotSW LEP Strategic Economic Plan

• Mixture of infrastructure, transport, housing, IT schemes

• BUT, includes an Unlocking Growth Fund to invest in key employment sites – await further details

• Mixed messages – make use of the ‘Project Bank concept’


Owner / Occupier

North Devon + South West Growth Fund

Area HotSW LEP Wider South West – as far as Wiltshire and Dorset

Applicants All companies – but some priority sectors

Level of grant £25K to £499K £15k to £1m

Timetable Open for business Open for business

• More positive re grants

• Capital expenditure Job creation


Owner / occupiers• Eligible sectors:

• Advanced engineering, marine, creative, and environmental technologies

• Manufacturing, food processing, electronics and pharmaceuticals

• Ineligible sectors:• Retail, warehousing, tourism, PROPERTY

DEVELOPMENT, and others

• Local market

• Tenants? – commercial point

• More positive – grants available


Housing developments

• Housing crisis – National Housing Federation - ‘supply is some 50% of demand’

• Plethora of Government Activity:• Housing Growth Partnership - £100m equity type fund

• Builders Finance Fund - £525m loan type fund

• £26m Fund towards brownfield development for first time buyers – August 2015

• LEPs’ Growth Deals

• Further detail on Homes & Community Agency website

• Lots of activity – are these schemes delivering?


State of the funding market - banks

• Selective appetite

• Increasing flexibility in face of competitive market

• Pricing still falling?

• Greater focus on debt servicing not just security value

• Interest rates speculation – 2% by 2019

• Cautious optimism??


Challenger banks

• Vince Cable

• More and more entering market• Virgin, Paragon, Aldermore, Metro, Williams & Glyn

• ‘We have advanced over £1bn to small trading businesses and professional property investors since coming to market in 2011.’ Shawbrook

• Will they challenge the high street? Time will tell


Peer to peer lending

• Increasing popularity

• 2011 - £90m, 2014 - £1.2bn, …. 2020 - £12.3bn!

• Higher interest rates but quick decisions

Assetz Capital – ‘Shovel ready housing schemes’

Folk 2 Folk – ‘kick starting multi- million pound commercial property developments’


What makes a good funding application

• Match what you are doing with the most appropriate source of funding

• Investment ready• Business plan

• Financial history

• Financial projections


Summary

• Developers - mixed messages, watch this space

• Owner / occupiers – more visibility re grants; be careful of the preferences

• House builders – plethora of Government initiatives

• State of the funding market – changing on a daily basis; greater variety; increasing competitiveness

• Investment ready – be prepared and self-challenge!


Keeping up to date

• Our role is to keep abreast of what is happening

• http://www.francisclark.co.uk/services

Dave [email protected] 056164

Paul [email protected] 331841

Andy [email protected] 945513

• Or your usual Francis Clark contact

mailto:[email protected]



Grants and Funding Update


BREAK

Top 7 VAT queries relating to property

Julie TowersVAT Partner


1. Are there any special rules for new commercial buildings?

• What buildings are affected?

• New buildings or partly completed buildings excluding dwellings, relevant residential buildings and relevant charitable buildings

• Includes buildings with occupancy restriction i.e. holiday accommodation

• New or partly completed civil engineering works e.g. roads, bridges, car parks and golf courses

• Building is new when it less than 3 years old from the date of completion

• Completion is the earlier of: issued date of certificate of practical completion or date first fully occupied


1. Are there any special rules for new commercial buildings?

• Why does it matter?

• Sale of freehold interest in a new building is taxable

• Sale of freehold interest in ‘old’ building is exempt (unless Option to Tax has been made)

• Rules apply however many times the asset is sold before it is 3 years old

• Rules do not apply to anything less than the freehold interest


2. I am selling commercial property, do I need to charge VAT?

Property is not being sold as part of a business

• Standard rated if

• Selling freehold interest and less than 3 years old

• Any interest in the land and an Option to Tax has been made

• Exempt if

• Selling any interest and more than 3 years old and no Option to Tax

• Less than freehold interest, less than 3 years old and no Option to Tax



Property is being sold as part of a business

• Outside the scope if the property is being sold as part of a Transfer of a Going Concern (TOGC) for VAT purposes and criteria met

• Examples

• Sale of a property rental business e.g. industrial estate with tenanted properties

• Sale of a trading business e.g. sale of a manufacturing business including the factory



Property is being sold as part of a business

• If the sale of the property would otherwise be taxable additional criteria

• Buyer must make an option to tax

• Anti-avoidance legislation must be considered

• Complicated case law on this subject


3. Can I get rid of an Option to Tax?

Owner/landlord• After 20 years using form VAT

1614J

• 6 month cool off period using form VAT 1614C. Only applies if no supplies made

• Automatic revocation 6 years since held a relevant interest

Buyer/tenantBuyer/tenant can disapply the vendor’s/landlord’s option to tax in certain situations

• Building to be used or converted for use as dwelling or for relevant residential purpose

• Use for a relevant charitable purpose by a charity

• Land sold to a housing association which will construct dwellings on the land

• Land sold to an individual to construct a dwelling for non-business purposes


3. Can I get rid of an Option to Tax?

Option to Tax Unit – 50 working day delay


4. What is a dwelling for VAT purposes?

• It depends!

• Criteria as defined in the VAT Act 1994

• Self-contained

• No internal access to another dwelling

• No restriction on separate use or disposal

• In accordance with planning


4. What is a dwelling for VAT purposes?

• Increasing number of Tribunal cases over the last 3 years

• Issues

• Retention of façade/parts of former buildings

• Annexes

• Can a dwelling comprise more than one building?

• Permitted development rights


5. When is the reduced rate of 5% available for construction services?

• Conversions that involve a change in the number of single household dwellings in a building. Includes

• Conversion from commercial use to dwelling e.g. barn conversion

• Conversion of house to flats

• Conversion of building to multiple occupancy (bedsits)

• Conversion of building to relevant residential use e.g. student accommodation

• Renovation of residential building that has been empty for more than 2 years


5. When is the reduced rate of 5% available for construction services?

• 4 June 2015 CJEU ruled that the UK application of the reduced rate of VAT for energy saving materials is contrary to EU law

• Currently the reduced rate applies to the installation of energy saving materials, and the goods themselves when provided with qualifying services

• The reduced rate will continue in the short term.

• Government is ‘considering the implications of the decision’

• HMRC has announced that no change will be implemented until Finance Act 2016


6. What are the VAT implications of a change of intention?

• Initial recovery of VAT should be based on the intended use of the expenditure at the time it is incurred

• If before the original intention is fulfilled the intended use changes, the original recovery of VAT should be re-visited. The rules apply broadly where the change of intention is within 6 years.

• The rules could result in either a payment of VAT due to HMRC or a repayment of VAT due to the taxpayer


6. What are the VAT implications of a change of intention?

Example

• Arthur bought a piece of land in 2012 for £500k plus VAT (£100k). He intended to build and sell new dwellings on the land

• As the sale of new dwellings is taxable at the zero-rate, Arthur recovered the VAT of £100k in 2012

• In 2015 Arthur decided to rent the new dwellings on ASTs. The income from the short lets is exempt for VAT purposes

• Arthur should repay the £100k VAT to HMRC in the VAT period in 2015 in which he changes his intention


7. Should an overseas supplier be charging UK VAT?

• 2014 First Tier Tax Tribunal case of Muster Inns

• Facts

• Muster Inns based in the UK and VAT registered

• Non-established supplier from Guernsey provided building services

• Overseas supplier was registered for VAT in the UK and charged VAT at the standard rate

• Muster Inns recovered the VAT, recovery challenged by HMRC on the basis that the overseas supplier should not have charged VAT and Muster Inns should have accounted for VAT using the reverse charge procedure


7. Should an overseas supplier be charging UK VAT?

• First Tier Tax Tribunal agreed with HMRC and held that the non-established overseas supplier should not have charged UK VAT and that Muster Inns should have accounted for the VAT on its VAT returns using the reverse charge procedure.

• VAT reclaimed by Muster Inns was disallowed by HMRC

• This could apply to you if

• You are VAT registered in the UK

• An overseas supplier has a UK VAT registration but no establishment in the UK

Top 7 VAT queries relating to property

Energy & Sustainability

Andrew KillickCorporate Finance Partner

&Damian Lannon

Corporate Tax Partner

The Learning Clinic


• Where are we since the budget ?

• Should you still invest in renewables ?

• Investment tax reliefs


What is the future of electricity generation?

Centralised Decentralised

• Less vulnerable to failure of a single power station

• Less electricity losses in transmission

• Self-sufficiency for towns / local areas

• CEO National Grid “The idea of large power stations for baseload is outdated”

• Smart Meters to be installed by 2020


Where are we since the budget ?

• The landscape has changed significantly since election

• Government appears to be favouring expensive energy

• Reduction in subsidies• Devolve planning decision making powers to

local authorities= Inconsistency in Government aims V actions “Greenest Government ever” is becoming distant memory(eg shifted Vehicle Excise Duty (VED) so a Porsche pays as much as a Prius – a decision the AA said would lead to drivers using more polluting cars!).


• Wave of policy announcements to reduce / remove support

• Justifications based on affordability (which is under review)

• Lack of clarity may undermine investment in sector

• Developer and investor uncertainty• Sparked number of legal cases and petitioning

• Expectation more shale and nuclear………Is Government policy misguided short termism or just lacking any direction ?

What has been done ?


Tax benefits withdrawn

The good old days

FiTs + generous tax relief

Now

EIS Subsidised generation of electricity = qualifying activity

Subsidised generation of electricity = non-qualifying unless through a community project

Annual Investment allowance

100% tax deduction up to £500k From 1 Jan 2016, 100% tax deduction up to £200k

Capital allowances Claimed at 20%/18% Only eligible at special rate 8%


Investor tax reliefs

2015/16

EIS VCT SEIS SITR**EU state aid pending

Maximum investment – individual

£1m £200k £100k £1m

Maximum fund raise – company £5m p.a. £5m p.a. £150k in 3 yrs £5m p.a.

Income tax relief 30% 30% 50% 30%Minimum holding period 3 years 5 years 3 years 3 years

One year carry-back Yes No Yes Yes

Dividends Taxable Exempt Taxable TaxableCapital gains Exempt after 3

years Exempt Exempt after 3 years

Exempt after 3 years

Capital gains deferral Yes No No Yes

Capital gains tax holiday No No Yes No


Further restrictions - EIS

• State aid restrictions

• Purchase of trade and assets

• Existing shareholdings’ requirement

• Permitted maximum age requirement


Social Investment Tax Relief

• An alternative to EIS?

• Community projects

• Equity and debt

• Index-linked returns

• Current limitations and state aid approval


01 January 2010

01 January 2011

01 January 2012

01 January 2013

01 January 2014

01 January

2015

01 January

20160

5

10

15

20

25

30

35

40

FiT's - Significant Reduction Since 2010

Wind Turbine (500kW)Solar PV (10-50kW)Stand-alone PVExport Tariff

(p/k

Wh)

Should you still invest in renewables ?

2010 2011 2012 2013 2014 2015 2016

Technology FiT Reduction on 2010 LevelsWind (500kW) 51%

Rooftop Solar (10-50kW) 70%

Stand-alone PV 88%

2015/2016 values



Report commissioned by REA : http://www.r-e-a.net/upload/uk-solar-beyond-subsidy-the-transition.pdf

Domestic PV LCOE vs. retail electricity tariff

Grid parity for domestic PV with residential electricity prices expected in the next 1-2 years.Cost reductions of 70%

in last 5 years and projected 35% over

next 5



Report commissioned by REA : http://www.r-e-a.net/upload/uk-solar-beyond-subsidy-the-transition.pdf

Non-domestic PV LCOE vs. retain electricity tariff for industry and services

Grid parity for non-domestic PV with industrial electricity prices expected within the next 5 years.


Is investing in renewables worthwhile ?• Project costs falling

• Solar and onshore wind could be subsidy free in 2-3 year time

• Energy costs (gas and electric) expected to rise• Tax benefits may still be available

• Post subsidy EIS availability – look at overall investor returns available without subsidy

• Capital allowances and Annual Investment Allowance still available

• So……. Yes: • Small scale – direct into properties (site specific issues to

overcome) • Community schemes – benefit from EIS and FIT – short term

window• Larger scale with no FIT, but possibly EIS

Panel session -some recent tax changes to residential property


UK residential property/dwellingsRecent tax changes – increasing impact for South West properties

Date ATED/SDLT Event21 March 2012 SDLT

SDLT

7% rate introduced for residential property over £2m15% special rate introduced for companies acquiring residential property over £2m for non-qualifying purpose

1 April 20135 April 2013

ATEDATED-related CGT

Introduced for properties over £2m used for non-qualifying purpose

20 March 2014 SDLT 15% special rate threshold reduced to £500,000

4 December 2014 SDLT New bands and rates introduced

1 April 2015 ATED Starting threshold reduced to £1m

1 April 2016 ATED Starting threshold reduced to £500,000


Annual tax on enveloped dwellings (ATED)

Initially introduced to counter perceived SDLT abuse.

Annual charge from 1 April 2013 for UK dwellings/residential property:

• owned by companies, corporate partners and collective investment schemes,

• worth over £2m on 1 April 2012 or date of acquisition if later.

• used for a non-qualifying purpose.

ATED-related capital gains tax from 6 April 2013 for disposal of “ATED” properties:

• loss of indexation relief

• 28% capital gains tax rate on “ATED-related” gain

• restriction of losses against other company gains


Annual tax on enveloped dwellings (ATED)

• £65m was expected to be collected in ATED – HMRC actually collected:

• £100m 2013/14

• £116m 2014/15

• 89% of receipts in respect of London properties

• 52% of receipts from houses in London borough of Westminster

Relatively small impact on South West due to £2m starting threshold.


Changes introduced for the “foreign” owner• Non- residents previously not liable to UK capital gains tax

• From 6 April 2015 liable to UK capital gains tax on UK residential property/dwellings

• Rebasing of property value at 5 April 2015

• Tight reporting deadlines:

• return must be submitted to HMRC within 30 days of completion,

• capital gains tax liability may be payable within 30 days of completion(with exceptions)

• From April 2017 proposed changes for non-doms:

• Foreign wrappers holding UK residential property looked through for inheritance tax purposes

• Excluded property trusts affected

• HMRC consultation document and draft legislation yet to be published


Panel Session

John Endacott, Julie Towers,

Heather Britton and Karen Bowen


LUNCH


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