You’re an offshore company and you have decided that your next investment will be offices in the UK. Investing in UK commercial property is sensible from a tax point of view compared with investing in residential property due to:
- lower maximum rate of 5% SDLT;
- no annual ATED charge on holding the property within a corporate envelope;
- residential property, however held, is within the scope of UK IHT. Commercial property is not affected.
However, you do need to be aware of the government’s plan to introduce a beneficial ownership register for all overseas companies that acquire, hold or dispose of UK property that is:
- Residential or commercial freehold property, or
- Registered leases of over 21 years.
This register will be kept at Companies House and, importantly, will be freely available to the public.
Information on the register includes the usual information about the company AND, importantly, information about the beneficial ownership of the company.
The definition of a disclosable beneficial ownership interest is expected to mirror the definitions in the PSC register, for example someone with more than 25% of the shares in a company.
So if there are 3 shareholders of ABC Limited, each with 1/3 of the company shares, their details will be on this register: name, DOB, nationality, service address.
If therefore ABC Limited wants to acquire these offices, it will have to comply with these requirements, and its shareholders’ information could appear on the register.
Points to note:
- In a structure with a discretionary trust with a wide class of beneficiaries, with a corporate trustee holding UK property, privacy might still be afforded. The settlor and beneficiaries can, subject to careful drafting of the trust documents, be kept off the register.
- The register is an interesting development, in that it will apply equally to commercial property as well as residential property. Up till now, the government has resisted taxing foreign-held commercial property compared to the very many tax changes on residential property. However, in the November 2017 Budget, it was announced that from April 2017 non-residents will be charged CGT on UK commercial property.