Posted by James Pearson on 26 Mar 2013

Ownership of Residential Property

If you own a company that holds property, you may have recently received a letter from HMRC warning you of the new Annual Residential Property Tax. This is a charge that is designed to counter tax avoidance through the use of limited companies and other “non-natural” entities to own residential properties.

Annual Residential Property Tax

If a residential property is owned by a “non-natural person”, the tax will only apply where the residential property in question was worth more then £2 million on 1 April 2012, or the date of acquisition if later. Any tax payable will be determined by reference to which of a series of tax bands the property value falls within, with a set charge being due for each band.

Even if a company owns a residential property worth over £2 million, it may still be the case that the Annual Residential Property Tax is not due as there are a number of exemptions in place. For example, the tax may not apply to companies that trade as property developers or engage in genuine third party commercial letting.

HMRC do not appear to be targeting these letters with any great degree of accuracy and it may be that you can simply ignore yours, but if the tax is due, the first return must be made by 31 October 2013 and there are penalties for not complying.

If you have received a letter from HMRC about the Annual Residential Property Tax, we can advise on whether the letter is relevant to your situation, and if so what this means for you. If the Annual Residential Property Tax does apply, it may be that your current structure is no longer suitable and we have a range of alternatives that may be appropriate.

Contact us

If you would like any advice regarding the above article or would simply like to discuss other ways in which we could help you or your business, please contact us on 01962 856 990 or


See also…

New Tax Relief on Mortgage Restriction

Residential Properties Owned by Companies: Tax Charges

Capital Gains on Residential Property

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