Episode Details

The UK Taxes That Still Apply to Offshore Property Structures

Holding UK real estate through an offshore company or trust does not remove the property from the UK tax system.

That distinction is fundamental.

Even where an international structure produces legitimate succession, ownership, or estate-planning consequences, the underlying UK property can remain subject to significant UK taxes and filing requirements.

Four areas require particular attention.

🏠 1️⃣ ATED — Annual Tax on Enveloped Dwellings

ATED can apply where UK residential property valued above the statutory threshold is held by a company, partnership with a corporate member, or collective investment scheme.

The threshold is currently:

More than £500,000

The annual charge depends on the property's applicable valuation band and is updated periodically.

Importantly, a property may qualify for relief—for example, in certain property rental or development circumstances—but an ATED return or relief declaration may still be required depending on the facts.

Failure to comply can result in penalties and interest.

💷 2️⃣ Capital Gains on UK Property

The UK substantially expanded the taxation of gains made by non-residents on UK land in April 2019.

As a result, non-residents can potentially be subject to UK tax when disposing of:

• UK residential property

• UK commercial property

• Certain interests deriving substantial value from UK land

For offshore companies, gains on UK property are generally considered within the corporation tax framework.

Separate reporting and payment requirements can also apply depending on the taxpayer and transaction.

The applicable filing procedure should therefore be determined based on whether the seller is an individual, company, trustee, or another type of entity.

🏢 3️⃣ Corporation Tax on UK Rental Income

Since April 2020, non-UK companies carrying on a UK property rental business have generally been brought within the UK corporation tax regime for that income.

This can require:

• Registration with HMRC

• Calculation of taxable property profits

• Payment of corporation tax

• Filing a Corporation Tax Return, generally including a CT600

The applicable corporation tax rate depends on the company's level of profits and the rules in force for the relevant accounting period; it should not automatically be assumed that every company pays 25%.

🧾 4️⃣ The Non-Resident Landlord Scheme

The Non-Resident Landlord Scheme (NRLS) is particularly relevant where rental income is paid to an overseas landlord.

Unless HMRC has authorised payment of rent gross, a letting agent—or in some circumstances the tenant—may be required to deduct basic-rate tax from rental payments and account for it to HMRC.

Importantly:

Receiving rent gross under the NRLS does not exempt the offshore company from corporation tax.

It simply changes how the tax is collected during the year.

🏡 5️⃣ Stamp Duty Land Tax

SDLT can arise when land or property in England or Northern Ireland is acquired.

The amount depends on factors including:

• Purchase price

• Property type

• Purchaser

• Applicable surcharges

• Availability of relief

Companies acquiring residential property can face special rules, including higher rates in certain circumstances.

Scotland and Wales operate separate property transaction tax regimes rather than SDLT.

🔍 6️⃣ Offshore Ownership Does Not Remove UK Visibility

UK property creates an inherently strong connection with the UK tax and regulatory system.

Relevant information may arise through:

• Land registration

• Companies House and the Register of Overseas Entities

• C