Non-resident landlord companies
From 6th April 2020
For the 2020/21 tax year and onwards, Non-resident landlord companies must report their UK income by way of a CT600 return under the corporation tax system. The major difference to the old system is that accounts will need to be prepared as well as a corporation tax return (CT600), the return and accounts will need to be filed electronically using a commercial iXBRL filing software system. Unfortunately, HMRC does not provide a free HMRC corporation tax filing software.
If the company has previously registered for the Non-Resident Landlord Scheme (NRL) HMRC will automatically register them for a Corporation Tax UTR and issue a letter directly to the company outlining the transition arrangements. HMRC started issuing the letters to existing NRL scheme companies from 18th January 2020.
If the rental income commenced on or after 6th April 2020 then companies will no longer be able to register under the NRL scheme and will have to register directly for corporation tax using the following link Register For Corporation Tax
HMRC have advised that initially all new tax return periods will run to 5th April 2021, keeping in line with the self-assessment tax year. If the company prepares its accounts to a different date the company must notify HMRC in writing of the accounts year end so they can update the new corporation tax record.
If there is already an accountant, tax agent or adviser acting on the companies behalf for self-assessment the company will need to complete a new form 64-8 to authorise HMRC to continue to deal with them on the companies behalf for corporation tax.
Where letting agents are withholding tax the rules will be changing slightly to accommodate the transition to corporation tax but the fundamentals of the regime will remain in place.
Filing the CT600 tax return and tax payment dates
Unlike the SA700 which must be filed by paper by the 31st January following the end of the tax year, the CT600 must be filed online one year after the year end date.
Under the corporation tax system, any tax liability that is due to HMRC must be paid nine months and one day after the year end date.
For example, if the year-end date is 5th April 2021, the CT600 filing deadline would be 5th April 2022 any tax liability would be due to HMRC on the 6th January 2022.
Corporation tax rates
Corporation tax is charged at 19%. From 1st April 2023, the Government has proposed that corporation tax will be charged at 19% on the first £50,000 of profits, 26.5% on the next £200,000 of profits and 25% on any profits in excess of £250,000. If you (or a number of you) control more than one company then the bands are divided equally among the associated companies.
© Thandi Nicholls Ltd 2021 All Rights Reserved – The above articles are provided for guidance only and may not cover your personal circumstances so you should not rely on them. It is important that you seek appropriate professional advice which takes into account your personal circumstances where you can provide the full facts of the case and all documents related to your case. Thandi Nicholls Ltd t/a uklandlordtax.co.uk, K Nicholls FCA or S Thandi cannot be held responsible for the consequences of any action or the consequences of deciding not to act.
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