Re:locate magazine | Finance | Budget will affect houses owned through companies

Gordon Brown’s 11th Budget contains changes that will affect landlords and companies owning houses. Explains tax experts Horwath Clark Whitehill, ‘The current situation is that UK residents tend to own real estate in other countries indirectly – a company owns the property and the individual owns the company. This is usually for local legal reasons, but it has been suggested that it could produce a very bad result for UK tax. The owner could be taxed as if the company was providing a benefit in kind. The law is being changed to make it clear that no such charge should arise in most straightforward situations – where the company is owned by individuals, its major asset is the building and its activities are restricted to owning and letting the building. The change will apply retrospectively.’ Meanwhile, landlords are able to deduct 100% of capital expenditure on certain items that enhance the energy efficiency of let property. This relief is extended with effect from 6 April 2007:

Limit of £1,500 per building extends to £1,500 per property (so in a block of flats the limit is significantly increased);
The scheme will run to 2015 (previously 2009);
At present, the relief is only available to landlords who pay income tax. It is to be extended to corporate landlords from a date to be announced.

For more information on Horwath Clark Whitehill, see www.horwathcw.com.

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