Restrict Non Residents’ UK Property Purchases?

I read an article yesterday where an MP suggested restricting the number of properties that are available for non UK residents to purchase. The idea being that if wealthy foreigners didn’t buy the properties then they would be available for UK residents and hence the housing shortage would be lessened.

This got me thinking – but what if a non resident, was still keen to buy UK properties. How would they go about organising it? I came up with an idea in terms of UK taxes, but ignoring non UK taxes. Would you please tell me what I’ve missed out? What pot holes can I not see please?

Let’s say, I open a UK limited company, inject £50k and then buy a property for maximum £100k. As I am purchasing as a UK resident (corporate), I am liable to corporation tax on any profits, but my mortgage and many other expenses are tax deductible. As this is my first purchase, I pay the lowest level of stamp duty. I could buy multiple properties, each in their own UK limited company. I would pay yearly accounting costs for the running of the company/companies.

Now let’s say that I wish to sell and the property is valued at £200k. As the limited company is only to hold the property, I sell the shares in the company. As I am non UK resident, I do not pay CGT on the gain on the shares. As the sale is shares, there is no stamp duty. So the only taxes to pay would be any local/non UK taxes. Correct?

Now let’s say that instead of selling the shares, I give them to my children. Again, as the gift is shares, there is no IHT, no CGT, and no stamp duty. So the only taxes to pay would be any local / non UK taxes. Correct?

Setting up a UK limited company is simple, but would it need a specialist set of Articles or Memorandum?

If your turnover was above the VAT threshold, you’d need to account for VAT.

If the local tax system demands a yearly valuation of company shares, this could be challenging. Perhaps you would need to have a professional valuation every 5 to 10 years.

Simply put : buy each property in a separate UK limited company and if you want to sell/gift, do so to the shares.

So what are the other problems with this idea?

Sam

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