Corporation Tax System Changes for Non-Resident Landlords

Introduction to the New Corporation Tax System for Non-Resident Landlord Companies

The United Kingdom implemented significant changes in its corporation tax system starting from April 6, 2020, which specifically impacted non-resident landlord companies. These changes necessitate a shift in how these companies report their income. Now, they must report their UK income by filing a CT600 return within the system for the 2020/21 tax year and beyond, marking a departure from the previous reporting system. The new regulations mandate the preparation of financial accounts in addition to the filing of a corporation tax return (CT600).You must submit both the return and financial accounts electronically, using a commercial iXBRL filing software system. Notably, HMRC (Her Majesty’s Revenue and Customs) does not provide free HMRC corporation tax filing software.

Transition for Rental Income Reporting

For companies whose rental income commenced on or after April 6, 2020, a crucial change relates to the registration process. These companies can no longer register under the Non-Resident Landlord (NRL) scheme. Instead, you must directly register for corporation tax by using the designated link on the HMRC website.

CT600 Filing and Payment Deadlines Under the Corporation Tax System

Within the non-resident landlord company framework, specific deadlines apply:

CT600 Return Filing: The CT600 return must be filed online within one year after the year-end date.

You must settle any tax liability owed to HMRC within nine months and one day after the year-end date.. For example, if the year-end date is April 5, 2022, the CT600 filing deadline would be April 5, 2023, and the tax liability would be due by January 6, 2023.

Corporation Tax Rates in the New System

As of April 1, 2023, the government has introduced a tiered approach to corporation tax within the revamped system:

A 19% tax rate applies to the first £50,000 of profits.

Profits between £50,000 and £250,000 are subject to a 26.5% tax rate.

Any profits exceeding £250,000 are taxed at a rate of 25%.

It’s important to note that individuals or a group of individuals divide these tax bands equally among the associated companies if they control multiple companies.

In conclusion, the UK’s corporation tax system has undergone a substantial transformation for non-resident landlord companies, necessitating a shift in reporting and compliance procedures. Understanding the new requirements and deadlines is essential for these entities to meet their tax obligations in the United Kingdom.

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