All purchases of UK commercial property are subject to the following:
Other considerations on purchase of commercial property: A purchaser must review the capital allowances position and consider making a section 198 election. Also, they must consider the VAT position of the property and whether VAT will be payable on its acquisition or whether the property can be transferred as a VAT exempt ‘transfer of a going concern’ (TOGC). This depends on whether the sellers have opted to tax for VAT purposes; this may, in part, depend on whether their tenants are able to recover any VAT charged on rents. To qualify for TOGC treatment, the purchaser will need to register for VAT.
The UK tax regime applicable to non-UK investors in commercial property has been fairly generous. The transaction tax on a commercial property acquisition is low and so is the effective rate of tax on gains realised on the disposal of the commercial property.
Most UK commercial property ventures exist with a non-UK company acting as a special purpose vehicle. This is a tax efficient way out that offers options in terms of future disposal routes when an investor wants to exit the investment. Investment into a UK commercial property through a non-UK company removes the possibility of any applicability of UK inheritance tax.