The Finance Act 2008 introduced new reliefs for UK resident owners of foreign properties bought using a company. This is a common way to own a property in some countries, as the tax and legal advantages can be substantial.
The new legislation exempts from charge as a benefit in kind any living accommodation outside the UK that is provided by a company for a director or other company officer, or for a member of their family or household, where all of the following conditions are met:
- The company is wholly owned by the director, or by the director and other individuals (and no interest in the company is partnership property);
- The company’s main or only asset is a relevant interest in the property; and
- The company's only activities are ones that are incidental to its ownership of that interest.
Under these circumstances, there is no UK tax charge whatsoever.
This means that where the provision of living accommodation outside the UK satisfies the statutory conditions, no liability to Income Tax in respect of the benefit of that provision arises for any tax year.
In practice, the way the legislation has been written means that if you are able to show that you have paid tax for any year before 2008/2009 on income resulting from ownership of a foreign property and the above conditions have been met, then you should be eligible for a tax refund.
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