Is my property subject to UK inheritance tax? 

 

No matter how it is owned, UK residential property will generally fall within the scope of Inheritance Tax. That said there are some limited exceptions when it comes to property that is used for trade or business, this also includes farming, although it is thought that these reliefs may be substantially restricted in the Chancellor’s Autumn 2020 Budget due to the deficit COVID-19 has left us with. 

 

That said, where a person borrows money to acquire property, the taxable value for Inheritance Tax may be reduced, subject to the criteria being met. 

 

Where property is gifted (or shares of property) there can be both immediate and later Inheritance Tax Charges particularly where a person making the gift retains an ongoing right or benefit. 

If you do not reside in the UK but own UK property, net real estate gains are taxable in almost all circumstances when realised. Historically this was not the case and pre 2013 many non-resident owners of UK property were exempt from Capital Gains Tax. 

 

Transactions between married couples and companies in a Capital Gains Tax group are treated slightly differently in that the recipient will acquire the transferors Capital Gain Tax at a “base cost” for any future disposal. 

 

Since the 6th April 2020, non-UK companies have been taxed up to 19% corporation tax on any taxable gains from both commercial and residential property within the UK. Generally, those who are not subject to Corporation Tax will be required to pay Capital Gains Tax on any realised income. 

When a UK property is rented out, any rental income after expenses, is subject to UK tax, regardless of the residence or domicile of the recipient. 

More information can be found on our blog but as a summary there are several rates of Stamp Duty, be it residential, commercial or mixed used property with differing rates depending on whether you are purchasing as an individual or company. 

 

If you are concerned about the tax implications of a property transaction it is recommended that you contact a tax planning specialist who will be able to provide financial advice. After you know how you wish to proceed with the financial matters you will need a property law solicitor to handle the legalities of the transaction. Contact MG Legal’s solicitors in Garstang via enquiries@mglegal.co.uk or call 01995 602 129 or our property solicitors in Preston on 01772 783314.