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bigduckontax, Accountant
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We are group of investors who want to invest in the UK. Let

Customer Question

We are group of investors who want to invest in the UK. Let say we are 5 people (Kuwaitis) want to establish a company and will inject the money in it. We assume we will invest one million Pound in cash in unequal ownership between us. We want to invest mainly in residential properties (for example buying 3 houses) but also we will have commercial properties (for example one small office with retails in ground floor). The company will take local “in the UK” mortgage. My questions are:
1- What will be stamp duty rates? (As will be owned by a company)
2- What will be annual taxes? (As bought properties will be let and generate income)
3- If we sold one of the properties, what will be the tax on it or on company level?
4- If the vehicle “the company” want to increase its capital, or one of the owners want to exit and another one (new investor) will replace him, can we do it? And will there be any taxes on that?
5- Does number of people owning the company matter?
6- Should the company be offshore or onshore? (As all investors are non-UK residents)
7- Any other major issues we should consider?
Thank you,
Abdullah
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I'm Keith and happy to help you with your question.
Stamp Duty Land Tax rates are here:
https://www.gov.uk/government/publications/rates-and-allowances-stamp-duty-land-tax
I cannot be specific without a great deal more detail.
The company would be subject to Corporation Tax (CT) on its profits. Current rates of CT are 20% on profits up to 300K, 21% if over that limit.
If you sold a property any gain made would form part of the profit for CT.
Shareholders moving in and out of the company will do so by means of selling and buying shares at current market value. Individually they would be liable to Capital Gains Tax on any gain made, but if not UK residents this tax does not apply save from an April 2015 valuation gain. Adjustments to share capital (increases) do attract a tax, but it is insignificant.
Number of company members is irrelevant as far as UK Company Law is involved. I cannot advise for other jurisdictions without more detail.
I would suggest that an offshore vehicle might be better, but remember such services in tax havens do not come cheap, they are big business.
I suspect that you will need to retain a local professional to look after the company's interests in this matter as, over the years, affairs will become complex.
I do hope I have shed some light on your queries for you.
Customer: replied 2 years ago.

Thank you,

One point is not clear yet, now when you buy property under your name stamp duty is clear for property worth more than 250K, 500K, etc. But when you buy though company, what is the rates for stamp duty for property worth more than 125K, 250K, 500K, 1m, and 2 m.?

I could not find the answer in the attached link.

Thank you,

Abdullah

Expert:  bigduckontax replied 2 years ago.
The rates are the same for individuals or companies buying landed property in the UK, but do vary depending on the usage of the land. The rates are summarised here:
http://www.hmrc.gov.uk/sdlt/rates-tables.htm
Alternatively put 'stamp duty land tax rates' into any search engine and the sites giving rates from HMRC will be displayed.
Please be so kind as to rate me before you leave the Just Answer site, Abdullah.
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Expert:  bigduckontax replied 2 years ago.
Thank you for your support.
One tiny point, the very small duty payable if you increase the share capital of a company is called the capital duty. When setting up I suggest that you give yourselves ample rattle room in this area to allow for ins, outs and new issues. Also give directors powers to issue shares outwith general meetings.
Expert:  bigduckontax replied 2 years ago.
By the by, capital duty looks a dead duck from an internet search. It is over a quarter of a century since I last was involved in paying it as a Company Secretary when my firm expanded its capital base immensely which is why I advised you to ensure that it is large enough on formation.

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