May Property Tax Newsletter
Team Updates
Martin Quinton has celebrated his one-year anniversary at Affinia. He continues to grow the non-tax professionals network with the team and supports the wider service lines.
We welcomed Jake Egner in February, who is located primarily in Colchester but serves the entire group and is on hand to assist you and your queries.
Hannah Goldsmith joined as a joint support to both Private Client and Property Tax teams to assist in the growth demands and operations of both teams.
The team is overseen by Tom Butterworth, Associate Director.
New Client Win: £80m Hotel Development in Shoreditch
The Property Tax team, working alongside Richard Lane in the Audit service line, has been instructed on a major new project for a private equity-backed hotel and leisure group. The group holds a number of high-value assets across Europe and is now launching its first UK-based venture, an £80 million hotel in Shoreditch.
We’ll be advising on the client’s UK and offshore corporate structures, UK Corporation Tax exposure, and addressing a variety of operational tax issues relating to land and property.
We’re also supporting tax planning for the substantial fit-out phase and the launch of their new investment brand in the UK.
Recent Project: Preventing a £60k Tax Liability
To highlight how the technical expertise we all hold at Affinia can benefit all of our clients, large and small, there was a great recent matter:
A local Ipswich client with a property worth around £300k, consisting of a couple of flats and a commercial shop on the ground floor, was splitting out the titles to raise finance in a more cost-effective manner, reducing their finance cost and increasing their profit.
Albeit a small value issue, the mechanics are complex, and they involve disposals and acquisitions of assets for SDLT and CGT purposes, as well as several other issues.
We reviewed the legal pack drafted by the lawyers and identified that the proposed structure meant there would be no relief from full market value SDLT, Chargeable Gains for the company owning the property, and other issues relating to distributions from the company, as well as long term negative consequences.
We advised on the recommended amendments to the legal document pack and process to enable reliefs for SDLT and CGT to be applied, and to prevent the immediate issues on distributions and longer-term annual tax problems.
The client, whom we have worked with for many years, was very happy to cover our £4k fee for the work and saw the value and return on that investment.
This highlights no matter how ‘small’ the transaction may seem, or the fact it would be seen as a non-event for tax purposes, or even how ‘small’ the client may seem, we can deliver fantastic tax and commercial value to our clients.
We continue to receive a growing number of referrals internally and queries from our non-tax professional’s networks, particularly solicitors, on property-related matters such as SDLT, CGT, and VAT.
ATED Filing Complete – Keep It on the Radar
Thank you to everyone who supported this year’s ATED filings — all known 2025/26 returns have now been submitted. A few key reminders:
- The ATED year runs from 1 April to 31 March, and returns are filed in advance. For example, the 2025/26 return was due by 30 April 2025.
- ATED applies to UK residential properties valued over £500,000, held by non-natural persons (companies, partnerships with corporate members, or certain investment vehicles).
- A return must be filed even if full relief applies — reliefs must be actively claimed via the return.
- Trigger points include:
- Acquisitions: return due within 30 days
- New builds or conversions: return due within 90 days of first becoming a dwelling
If you’re advising on residential property transactions or have a client that may fall within the ATED regime, please let us know and we would be happy to assist.
HMRC activity and Case Law developments
It’s been a busy time in the world of property tax, with several high-profile cases and new HMRC activity keeping the sector firmly in the spotlight. From challenges to tax planning arrangements to landmark tribunal decisions, we’ve seen a clear message: HMRC is stepping up scrutiny and enforcement across a range of property-related issues.
Spotlight 63 Update – Property Business Arrangements Involving Hybrid Partnerships
In 2023, HMRC issued Spotlight 63, a warning against tax avoidance schemes where rental properties are transferred into an LLP with a corporate member, often to reduce Income Tax, CGT, and IHT.
HMRC does not consider this planning to be effective and has now begun issuing penalty notices to scheme users. These must be responded to within 90 days to mitigate penalties.
If you’re aware of any clients involved in such arrangements or who have received a letter from HMRC, please let us know and we can assess the position and offer support in responding to HMRC.
Recent announcement: Spotlight 69 – HMRC Targeting Landlord Tax Avoidance Schemes
Spotlight 69, announced 28 April 2025, targets schemes involving the incorporation of an LLP, followed by its liquidation and sale of properties to a limited company owned by the landlord. These arrangements claim to avoid CGT, SDLT, and potentially IHT. However, HMRC maintains that the scheme does not work and legislation (TCGA 1992 s59AA) has been introduced to counteract such arrangements, treating asset transfers to LLPs as disposals for CGT purposes.
If you have clients who may have implemented similar arrangements, let us know and we can help them withdraw from the scheme, correct their tax position, and mitigate exposure to penalties.
Recent CGT Case: Eyres Win £3.3m Dispute Over Chelsea Mansion
Raymond and Diana Eyre have successfully appealed a £3.3m CGT charge, after HMRC challenged their Private Residence Relief (‘PRR’) claim on the £27m sale of their Chelsea home.
The First-tier Tribunal accepted that the property had been their main residence, despite the short period of occupation, citing the quality and intention of use as critical factors. It also reaffirmed the principle that no trading activity arises where a property is purchased without a present intention to sell.
This case serves as a reminder that HMRC is scrutinising property-related relief claims more closely than ever.
If you have clients with complex CGT issues and would like support, please let us know.
Coming soon: Capital Goods Scheme threshold increase to £600,000
As part of the Spring 2025 Tax Update, the government announced it will bring forward legislation to simplify the VAT Capital Goods Scheme (‘CGS’). From a property tax perspective, the key update is:
The capital expenditure threshold for land, buildings and civil engineering works under the CGS will rise from £250,000 to £600,000 (exclusive of VAT).
This change will significantly reduce the number of property acquisitions or developments subject to CGS tracking, thereby reducing the VAT compliance burden for many clients, especially those undertaking smaller-scale residential and commercial projects.
The update also removes computers from CGS altogether.
If you have clients undertaking development or refurbishment works, or entering into options to tax, we are on hand to ensure property related VAT implications are fully considered and any issues are mitigated.
The team are on hand to assist with any property tax related matters and can be contacted via propertytax@affinia.co.uk