AUB holds seminar on UK real estate tax update, Brexit impact
Bank continues its commitment to provide financial awareness to its clients
KUWAIT: As part of its continuous efforts to disseminate and develop financial and banking knowledge to its customers which ensures their access to various financial services in an integrated framework of transparency and in a manner that promotes their access to their rights undiminished, and enables them to make sound and informed decision, Ahli United Bank (AUB) organized a seminar for its Private Banking and Wealth Management customers under the theme “UK Real Estate Tax Update & Developments”, as part of AUB’s continuous efforts to provide its customers with value added services. The seminar was held to enhance awareness regarding the expected effect on UK taxes of Brexit and steps required when buying or selling real estate in UK.
Held at the Hilton Metropole - London, the seminar targeted a select segment of AUB’s Private Banking Services and Wealth Management customers who are in London and are keen to attend this series of seminars regularly organized by Ahli United Bank for its customers in order to keep them aware of the changes in the economic and real estate areas.
In his opening speech, Senior General Manager for Private Banking Services and Wealth Management at Ahli United Bank, Medhat Tawfik, said: “By organizing these forums we seek to give our Private Banking Services and Wealth Management customers the opportunity to remain informed on the consequences of the UK leaving the European Union (Brexit) and recent development in Real estate Taxes.
Tawfik added: “The advice that AUB provides to its customers helps them better manage their investments and succession plans in changing market environment. These are a key element of our specialized services.” In her lecture at the seminar, Sara Maccallum, Senior Partner - Head of Commercial Tax at Boodle Hatfield Law Firm in London, outlined that property taxes are unlikely to have Brexit related changed in the short term and the expected tax effects on non-residents in the United Kingdom. The Annual Tax on Enveloped Dwellings (ATED) (residential properties) owned by offshore companies, with a value exceed Stg. Pound 500,000. Corporate structure can now be less advantageous if you need to occupy the property yourself (or allow family members to occupy). The Non-Resident Capital Gains Tax (NRCGT), which was introduced and applied in 2015 on residential properties and subsequently expanded in 2019 to include all real estate properties and indirect disposals, now needs consideration if you dispose of shares in a structure (as well as when you dispose of a property. Finally, the switch to the Corporation Tax which will include rental income (from April 2020) and capital gains on real estate properties (from April 2019) .
Sara Maccallum then addressed the matter of Inheritance Tax in the United Kingdom and the expected changes in this tax, as well as the predictable effect of the political and tax changes on investors. She concluded highlighting the importance of having a tax efficient English Will to cover the properties and avoid unnecessary tax on death. Shaima Jilloud, Partner in Real Estate Investment Middle East at Boodle Hatfield Law Firm, then gave a detailed presentation outlining the various stages of a real estate purchase transaction.
Offer: Once you have found the property you
G would like to buy, an offer is made, usually through the buying agent and once this has been accepted by the vendor, a Memorandum of Sale is issued to all parties. In the instance where a new build property is being purchased, a reservation deposit is paid.
Negotiation: The next stage is about negotiation.
G The contract will need to be negotiated by your lawyers and due diligence will need to be undertaken on the property you wish to buy, to ensure it is thoroughly investigated. The investigations may result in a detailed report on the title and searches that are investigated.
Property taxes are unlikely to have Brexit related
G changes in the short term and we will keep clients informed if this changes
Concluding on the right structure for a UK property
G investment is a complex area so take advice on the tax implications and what is best for you in the long term. Tax position will very much depend on your expected use of the property
Corporate structures can now be less advantageous
G if you intend to occupy the property yourself (or allow family members to occupy). Annual Tax on Enveloped Dwellings (ATED) can be an expensive annual tax. Now is a good time to consider de-enveloping (removing the properties from the corporate structure). There are some tax implications but often beneficial in the long-term
Non-resident Capital Gains Tax (NRCGT) now
G needs consideration if you dispose of shares in a structure (as well as when you dispose of a property)
Important to also have tax efficient English Wills to
G cover the properties and avoid unnecessary tax on death.
Most important part is to obtain proper tax advice to insure proper protection to your investment. In her presentation, Shaima Jilloud outlined the situation in the event of late completion by the buyer, the role of lawyers in the final stage of collecting the keys by the buyer, land registration and payment of the stamp duty land tax. This is very important to avoid any late penalties on completion.
At the conclusion of the seminar, Medhat Tawfik said:
“we are very happy with the results of this event, which reaffirms the commitment of Ahli United Bank to providing quality services to its customers and highlighting the latest developments in UK Real Estate Tax development. Also, he announced the new agreement with Meritas, the developer of Paddington Gardens’ project, which will add more services to our clients. Needless to say, the bank will continue to offer first-class banking services to its customers.”
At the end, a short walk visit to the Paddington Garden’s project took place in a private tour. Paddington Garden’s project the most recent project in Paddington area and was developed with highest quality and luxury and a very strategic location. This private exclusive tour gave the attendees a good opportunity to see details of the project.