HMRC consultation ‘Non-resident companies chargeable to Income Tax and non-resident CGT’, (closed 9 June 2017) explored whether non-resident companies with UK sourced property income or gains should pay corporation tax.

Key highlights are:

  • UK property income of non-UK companies would be taken out of income tax and brought within the scope of corporation tax.
  • This change would ensure consistency of treatment for UK and non-UK companies in terms of income, the deductibility of interest and availability of loss relief.
  • This would not be extended to other UK sourced trading income of companies which is currently within the income tax regime, as this applies to a very small number of companies because of the UKs tax treaty network.
  • Non-resident companies that make capital gains on UK residential property (NRCGT gains), will be subject to corporation tax on these gains, not capital gains tax.
  • Management expenses would only be deductible for non-resident companies to the extent they directly link to taxable UK sourced income.

The consultation ended on 9 June 2017 and anyone wishing to respond to the consultation questions can do so by email at This email address is being protected from spambots. You need JavaScript enabled to view it..

Consultation questions:

  • Question 1: Do you agree that it is more appropriate to apply interest restriction and loss reform to UK real property income within the CT regime rather than the income tax regime? If you consider that they could be applied within income tax, how would the interest restriction and loss reforms be applied in a consistent manner to companies within CT?
  • Question 2: If non-resident companies liable to NRCGT are brought within CT, what features of the NRCGT provisions do you think may give rise to difficulties if adapted for CT?
  • Question 3: Is there an alternative approach that could be taken in calculating the taxable profits or losses of a UK property business carried on by a non-resident company? If they differ to those applied to a UK resident company carrying on a similar property business, please explain why different rules should apply.
  • Question 4: Irrespective of the tax regime, what would be the effect on non-resident companies from the application of corporate interest restriction? Please explain how any effect is different to the effect on UK resident companies.
  • Question 5: Do you agree that relief for management expenses for non-resident companies should be limited to those which are directly linked to the taxable UK sourced income? What are your views on the extinguishing of unused property losses at the point the UK property business has ceased?
  • Question 6: Do you think that the suggested treatment of the unused income tax losses carried forward is reasonable? If you consider that there is an alternative approach, please explain what that would encompass.
  • Question 7: Are there other CT principles that you think would require transitional arrangements to be provided for?
  • Question 8: Do you have any comments on the assessment of equality and the impact on business as a result of this potential change in tax regimes?


Non-resident CGT: UK residential property

Non-resident landlord scheme

Permanent establishment and company residence

Company residence: Tribunal considers wider picture

External links:

HMRC consultation: Non-resident companies chargeable to Income Tax and non-resident CGT

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