UK and International Tax news

High Value Residential Property – Draft FB2013 Provisions

Friday 22nd February 2013

On 31 January 2013, the Government published revised and augmented draft legislation for the Annual Residential Property Tax (ARPT) on certain non natural persons (NNPs) including corporate and other entities owning high-value interests in residential dwellings and also for the related reliefs therefrom and from the 15% rate of SDLT.

The Government has also published draft legislation to introduce a capital gains tax (CGT) charge payable by certain NNPs when they dispose of interests in high value residential property in the UK on or after 6 April 2013.

HMRC has published the draft legislation plus explanatory notes for technical consultation until 22 February 2013.

Of particular importance are the reliefs from the ARPT, higher SDLT charge and exclusion from CGT  in relation to property held by certain genuine property businesses, including rental, development and trading businesses as well as property trades deriving income from making a significant part of the property available to the public for at least 28 days a year, non property businesses that make a property available for occupation by employees or partners with less than 5% ownership of the NNP, and farmhouses held by and for the purposes of a farming trade.

The reliefs for rental, development and trading businesses will not be available where the property is occupied by an individual connected with the beneficial owner or by the settlor of a trust where the trustee is connected with the NNP carrying on the business as well as relatives of those individuals.

As with ARPT, CGT will not apply to genuine property businesses, charities and businesses disposing of employee accommodation.

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