UK Law and Practice Contributed by: Colin Rodrigues and Harminder Sandhu, Hawkins Hatton Corporate Lawyers Ltd
tax the property before transfer. See 6.7 Pay- ment of VAT . 8.2 Mitigation of Tax Liability Mitigation of tax liabilities (such as SDLT or CGT) arising from the transfer of property requires specialist tax input and is specific to circum - stances. However, investors need to be mindful that the manner in which the legal title to the property is held, whether as an individual or as a corporate entity, will affect the applicable tax rates, available reliefs and options for mitigating any liability. For example: • if a property is owned by a company, then rather than transfer the property, shares could be sold, which would attract no SDLT; or • if property assets are transferred within a corporate group structure where SDLT relief is available or assets are held in a partnership between connected parties, and the part - nership is then incorporated, SDLT can be avoided. See 2.10 Taxes Applicable to a Transaction . 8.3 Municipal Taxes Business rates will be payable on the occupation of business premises, such as:
• holiday rental homes or guesthouses. The domestic rates will be payable to the local council in March of each year in respect of the amount required in the following tax year. The following are examples of available reliefs from business rates: • small business rate relief; • rural rate relief; • charitable rate relief; • enterprise zone relief; • hardship relief; • exempted buildings and empty buildings relief; and • transitional relief if one’s rates change by more than a certain amount at revaluation. 8.4 Income Tax Withholding for Foreign Investors The Non-resident Landlord Scheme A landlord who resides abroad for more than six months of the year must pay tax on any rental income received from a property in the UK. If the landlord is a company or trustee, the rules relating to their usual place of abode apply. The tax is collected using the Non-resident Landlord (NRL) Scheme. The tax can be paid by either the letting agent or tenant. 8.5 Tax Benefits There are tax benefits to owning real estate, but these require specialist tax advice/input.
• shops; • offices; • pubs;
• warehouses; • factories; and
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