Buying a home in the UK

Introduction

The UK taxes the ownership of property on acquisition, throughout the period of ownership, on disposal and on death. The tax due depends on how the property is owners. See the below overview if you are considring buying a property in the UK.

Taxes on the on the acquisition of UK Property

SDLT

SDLT is payable on the on the acquistion of property in England and Northern Ireland. The SDLT rates are as follow:

Purchase Price (£)	Standard SDLT rates for UK residents	Standard SDLT rates for Non-residents	Additional property SDLT rates for UK residents	Additional property SDLT rates for Non-residents
Up to 125,000	0%	2%	3%	5%
125,001 - 250,000	2%	4%	5%	7%
250,000 - 925,000	5%	7%	8%	10%
925,001 - 1,500,000	10%	12%	13%	15%
£1,500,001+	12%	14%	15%	17%

Non-residents pay a 2% SDLT surcharge. A 3% additional property SDLT charge may also apply, depending on how the property will be held.

Personal Ownership

There is an additional 3% surcharge if you own another property. The 3% SDLT surcharge applies whether you own another property in the UK or overseas. If, however, you are purchasing a property to replace your only or main residence, you may be able to apply for a repayment of the 3% SDLT surcharge.

Ownership by a Trust

The SDLT due on acquisition depends on the type of trust and where the trustees are resident.

Where the trustees hold the property as a nominee for an individual or the individual is entitled to receive the trust income as it arises, the trustees pay the same amount of SDLT as the indiviudal would have paid if they purcahsed the property as themself. Otherwise, the addiitonal property SDLT surcharge of 3%.

Non-UK resident trustees will also have to pay the non-residents SDLT surcharge of 2%.

Companies

Where the home is worth more than £500,000, the company pays SDLT at 15% on the value of the property.

Different property acquisition taxes apply to the purcahse of property in Scotland and Wales.

Taxes due during period of ownership

	Personal Ownesrhip	Non-UK discretionary Trust	Company
Income tax/ CGT	-	Where the individual does not pay full market rent, trust income or gains may be attributed to the individual up to the value of the benefit of being allowed to occupy the property.	Where the individual does not pay full market rent, income tax and NIC may be due on the benefit of being allowed to occupy the property.
Annual Tax on Enveloped Dwellings (ATED)	-	-	Assuming the property is worth more than £500,000 and ATED charge is payable.

ATED charges for 2021/22

Property value	Annual charge
More than £500,000 up to £1 million	£3,700
More than £1 million up to £2 million	£7,500
More than £2 million up to £5 million	£25,300
More than £5 million up to £10 million	£59,100
More than £10 million up to £20 million	£118,600
£7,500	£237,400

Tax on Disposal

The gain made on the disposal is chargeable to subject to Capital Gains Tax (CGT) unless Private Residence Relief (PRR) is available to exempt the gain.

	Personal Ownership	Trust Ownership	Company Ownership
Tax due on gain made on disposal	CGT at 18%/28%	CGT at 28%	Corporation Tax at 19%
Is PRR available to exempt the gain?	If you and your spouse are non-resident you may not qualify for PRR unless you spend suffient time in the proeprty on an annual basis.	The trustees may qualify for PRR where you occupy the property as a beneficiary of the trust (subject to review. fothe trust deed).	No

Inheritance Tax

	Inheritance Tax
Personal Ownership	40% on death
Trust Ownership	20% on entry and 6% on every ten year anniversary
Corporate ownership with Individual holding the shares	40% on death of the individual shareholder
Corporate ownership with trustees holding the shares	20% on acquisition of the property holding company amd 6% on every ten year anniversary

The above is an overview and you should seek professional advice. Contact us if you want to know more.