The new tax is part of a series of measures aimed at discouraging people from holding their high-value UK residences through companies (often overseas companies) and encouraging such ownership to be held by the individuals directly.
Any company or corporate entity which owns a single dwelling with a value of more than £2m. This will impact mainly on mansions, country estates or residences in prime locations – particularly areas of London. If a company owns a number of properties with a total value of more than £2m then the rules will not apply if each single dwelling is worth less than £2m.
Companies which carry on genuine property businesses; companies which hold portfolios with an aggregate value of more than £2m where no single dwelling is worth more than £2m; companies owning certain types of properties which are not classed as “dwellings”.
For the purposes of these new rules a building or part of a building counts as a dwelling at any time when it is either used or suitable for use as a single dwelling, or it is in the process of being constructed or adapted for such use.
Properties held by social housing providers will be outside the scope of the charge unless any single dwelling is worth more than £2m.
The new rules state that a return will only have to be made by a “chargeable person” if they are within the charge with respect to a single-dwelling for any period from 1 April 2013. If the charge does not apply because the single dwellings are worth less than £2m then there should be no need to do anything.
We are aware that HMRC has been writing to housing associations and care providers owning properties with a substantial value and informing them that they may be required to submit a return. It is most unlikely that housing associations would fall within the charge, in which case they would not be required to submit a return.
If you believe you do have any properties which may be subject to the charge, or are concerned about your obligation to correspond with HMRC, please contact us.