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Non-resident property developers and the changes to taxing dividends – the effect on withdrawing profits from a company.
My client is a UK-registered limited company which was established as a special purpose vehicle to buy develop and then sell two barns as residences. PAYE the construction industry scheme VAT and stamp duty land tax are all in order.
It is expected to realise a net profit from the development of about £500 000. The shareholders are all long-term non-UK residents and the plan was to pay the profits to them by way of dividends. As non-residents they would not have been liable to additional UK income tax beyond the tax credit so the sole tax charge was expected to be the 20% corporation tax.
With the changes to UK taxation of dividends from 6 April 2016 will they be liable to the effective 7.5% tax charge? If so is there an alternative?
I had considered advising a members’ voluntary liquidation of...
