Investors vs Developers
For tax purposes, there is a fundamental distinction for individuals and businesses that are involved in property transactions depending on whether they are:
- An investor; or
- A property trader – including developer and land dealer
Property investors
Property investors are taxpayers that buy property with the intention of holding property long-term return and perhaps harvest the rental income generated by letting the property.
There have been a significant number of changes to the tax position in the UK around property investment in recent years. These need to be factored into any model and any existing structures should be reviewed
Andy has advised on the following in recent years:
- Advising on the merits of incorporating a property portfolio or using alternative structures, including partnerships, LLPS and ‘hybrids’;
- The use of non-UK pension schemes to hold UK based property including QNUPS;
- Advising non-UK residents on how to invest in UK residential property in the most efficient manner;
- Advising on Stamp Duty Land Tax (“SDLT”) on property purchases;
- Ensuring that the future generation is not lumbered with a large inheritance tax liability
- Effectively pass value of property investment assets to successors whilst maintaining control over those assets
Property developers
Property development is a venture in the nature of trade, and provided that certain conditions are met, a property developer may be afforded a number of generous tax reliefs. However, they may also be subject to higher rates of tax on profits made from the property development if not structured properly.
It is common, for commercial purposes, that property developers undertake each development via a separate special purpose vehicle or simply ‘SPV’. But it is important to note that there are a host of suitable structures available to developers and which one is right often depends on each developers’ specific facts and circumstances.
Andy is happy to guide clients through their options and working with , other professional advisers, to ensure that their property development business is structured to suit their objectives.
Andy provides lectures to accountants and lawyers on the tax aspects of UK land and property.