UK property investment: use UK or offshore company

Many non-UK residents prefer to use offshore companies to invest in UK properties as individuals investing personally could have exposure to inheritance and other taxes.  An offshore company is not subject to inheritance tax and capital gains tax can also be avoided but if the structure is not set-up properly, anti-avoidance measures could apply.

UK companies investing in UK property could incur a “double whammy” for tax purposes.  Corporation tax on capital gains is payable on the disposal of the property held in the books and then tax could be payable again on disposable of the shares in the company held by the investor.  The main rate of corporation tax in the UK is currently 28% but individuals pay a flat rate of 18% on capital gains currently.

Offshore companies on the other hand pay “basic” rate income tax on net rent surpluses which is at a much lower rate than the corporation tax rate payable by UK companies.

Structuring property investments in the UK in a tax-efficient manner is a very complex area and RKG Consulting will be pleased to advice on all tax aspects of proposed structures.