UK Corporation Tax

The UK Corporation Tax (UKCT) regime is upon us. Are you ready?

Lisa Guy Lisa Guy

As another 31 January passes, HMRC have now received the final Non-Resident Landlord ("NRL") returns for non-UK companies that generate income via UK property rental. January 2021 was, however, different from those before it, as it marked the end of the paper NRL.

We have now entered a new electronic tax return regime, including accounts submissions, under the terms of UKCT legislation. This new system includes fundamentally different administrative requirements, and requires an in-depth understanding of how to calculate the UK profit (or loss).

As a reminder, with effect from 6 April 2020, all previous NRLs became subject to UKCT on their property income. The timing of the first UKCT submissions could be any time from now. Furthermore, based on how the UKCT instalment payment regime works, tax payments could already be falling due. The transition to the UKCT regime requires thought and planning. If action is left until near to the filing deadline, you may not be ready to file electronically, as it does also require having access to the correct software.

If you manage structures containing NRLs, conducting the UKCT compliance may be seen as complex and risky, especially with the various restrictions that can apply to financing and other costs, together with differing tax payment dates driven by multiple factors.
However, there is also a far greater scope for certain related companies to manage their affairs efficiently, for example, through the sharing of losses as group relief.

Added to this is the impending UK budget announcement scheduled for the 3rd of March.

Whilst we do not have insight into what the budget will contain, there are indications that it will include an increase in the headline UKCT rate. We shall be keeping a close eye on the announcement and any knock-on impact that the Channel Islands might feel.

With all the added complexities of the UKCT system, together with potentially increasing tax rates, it's clear that support will be necessary. That is why Grant Thornton's tax experts are here to help.

How Grant Thornton can help

Our team have significant UKCT experience and provide local support from our Channel Islands offices, to help you handle the ever increasing demands and frequent changes that stem from this tax regime. We will support our clients, ensuring the legislation is maximised as far as possible to mitigate effective UKCT rates, and ensure both timeous payment and submission of returns.

We've further strengthened our UK Tax support

To enhance our UK Tax offering even further, we have recently hired Joseph Neal, UK qualified Chartered Tax Advisor and Tax Technician, as an Assistant Manager. Joseph will work with our existing UK tax experts in our Jersey team to provide combined UK and Jersey tax advisory services for our clients, offering significant private client and corporate tax support experience.