1. Introduction -

This client alert provides a summary of key UK tax considerations when a nonresident invests into UK commercial real estate. There are a number of holding structures for investment into UK real estate by non-UK tax resident investors. The most commonly used vehicles (companies and limited partnerships) are considered below. While UK tax is not the determinative factor when considering UK real estate investment, it will be important to understand the tax implications for acquiring, holding and disposing of UK commercial real estate prior to its acquisition.

For the purposes of this alert, it is assumed that the real estate will be held as an investment. Profits of a trade carried on by a company are subject to UK tax where the company is dealing in UK land or developing UK land with a view to disposing of that land (as distinct from developing commercial real estate to let it out with an objective to realise it after a fixed period).