The tax applied to the purchase of real estate in London or England, is called Stamp Duty Tax. Before entering into the specifics and in the calculation mechanisms of the tax itself, we must premise that as in other realities, there is a distinction between first home buyer and not. In fact, the subject (natural person) who falls into the first category will pay tax at the time of purchase as follows : up to £300.00 untaxed taxable amount from £300,001- to £500,000 a rate of 5%. The criteria for the applicability of the reliefs are as follows: First time buyer
Maximum transaction value £500,000 Principal residence
Regarding the concept of applicability as principal residence, the legislation does not specifically provide for a minimum time frame, but leaves the concept of "reasonable use" to the interpretation of the jurist.
For all other persons, the purchase tax is applied as in the table below : Taxable bracket

In this case Stamp Duty applies to both natural persons and legal persons, provided that the purpose of the purchase is to bring the asset into income. We will then discuss what the tax advantages may be if you make a real estate purchase in London or in England as a legal person (understood as an SPV under English law) and we will also elaborate on
the special cases of applicability of the tax in certain transactions.
-Conclusions :
The purpose of covering these topics is to inform the potential investor about all legal and tax regulations in force in England.The rates of stamp duty, as well as the tax brackets and its objective and subjective applicability, are
subject to change depending on the various measures that the government may decide to take. For
this reason, the official website is listed below.
Indeed, information on Stamp Duty and its tax brackets can be found at:

http://www.gov.uk/stamp-duty-land-tax

A topic to be addressed after the purchase of real estate in London is the tax treatment inherent in the
future resale of the property itself, i.e. capital gains tax. Specifically, let us check in detail the
applicability of the tax on any capital gains of real estate value realised.
This tax should be analysed by distinguishing the taxable person into two categories:
a) natural person not resident in the United Kingdom;
b) legal person.
a) A non-UK resident individual is subject to a direct proportional tax of 28 % under the reform
effective from 01 April 2015. This rate is applied on the differential arising between the sale value and
the original purchase value by including certain deductible costs to the extent of 100 %. It should be
added that this rate is applied to the net realised value, but if it exceeds £12,000.00, this amount is
recognised as a Tax Allowance.
Thus : Vv1- (Va1 + C1 ) = Vn ; if Vn > £12,000.00 = 28 % on the net amount exceeding the Tax
Allowance ;
if Vn < £12,000.00 = no tax payable.
*Vv1 = sale value ; Va1= purchase value ; Vn = net value ; C1= deductible costs.
b) As far as the Capital Gains Tax treatment of a legal entity is concerned, the tax treatment is
simpler; i.e. any capital gain is taxed at the ordinary rate of 19 % and from 1 April at 18 % applied to
legal entities. For the deductibility of costs, the same accounting criteria are applied as for the ordinary
management of the SPV's object.
This tax is of crucial importance when one considers making a real estate purchase in London. Next
we will discuss inheritance tax in England and how it is determined and calculated.
All information on capital gains tax can be found at: http://www.gov.uk/capital-gains-tax.

When you want to make a property purchase abroad, or in this case in London, a tax is due on the value of real estate located outside the Italian territory, which is called V.I.E. Before going into the specifics, we need to illustrate the substantial difference between the levy and the tax.

Definition :

By levy we mean a tribute paid to the State or to a public body, by private citizens in order to use a service; the criterion of counter-performance therefore applies.

By tax is meant the compulsory levy of wealth and therefore an expression of the power of imperium attributed to the State.

Subjection :

Specifically, the Tax on Immovable Property Situated Abroad is payable by the following persons :

• natural persons;
• holders of certain rights in rem;
• simple partnerships, general partnerships, limited partnerships (effective from 2020);
• who are tax resident in Italy and are holders of a title or right in rem to any type of property.

What is meant by tax residence in Italy? A tax resident in Italy is anyone who for the majority of the tax year, i.e. 183 days out of 365 days, has their civil residence in Italy.

The rate correlated to the tax is 0.76% of the cadastral value of the property; in the specific case of a property in London or in the United Kingdom, since the cadastral value does not exist, the value attributed by the various Council Tax brackets is taken as the taxable reference base (in any case much lower than the real market value).

Non-applicability:

The tax is not due if the total amount does not exceed EUR 200.00.

The tax is also not due if an S.P.V. (legal entity) is used to carry out the real estate purchase abroad, in this case under English law.

The only obligation of the taxpayer resident for tax purposes in Italy is to declare the shareholding of the English company to the Italian tax authorities in the R.W box of the tax return.

Subsequently, we will illustrate the conditions and procedures under Italian law for not being considered tax resident in Italy and we will elaborate on the different tax residency regimes in the UK.

All the regulations on the applicability of the tax on the value of property situated abroad can be consulted on the website: https://www.agenziaentrate.gov.it/portale/

Real estate investment in London, or at any rate in England, is more advantageous if, in some cases, it is made through an SPV (special purpouse vehicle).

The initial condition of analysis concerns a taxpayer tax resident in Italy.

Let us now see what the tax aspects are:

– the proceeds are taxed at 19 %, i.e. the ordinary Corporation Tax rate is applied.

– the real estate owned by the company is not subject to I.V.I.E, Foreign Real Estate Value Tax.

– if the property is resold and a capital gain is generated, the tax that will be applied is the ordinary corporation tax rate and not the 28 % capital gain rate.

– by opting for the use of leverage, interest expenses arising from the loan can be deducted at the rate of 20 % as a tax credit.

– if the shareholders decide to distribute dividends from the vehicle, which will be taxed in Italy at 26 % if the receiving shareholder is a natural person. If, on the other hand, the shareholder-recipient is a legal person resident in Italy for tax purposes, it bears a 5 % tax.

– all travel expenses to and from London as well as all stays incurred by the director(s) are fully deductible in the tax year.

– all costs incurred by the company closely connected with the ownership of the property are fully deductible in the tax year.

– the property is owned by the incorporated legal entity without any intrinsic or joint connection of the shareholders.

Next we will discuss the use of leverage to make the real estate investment in London .all information regarding the incorporation of legal vehicles can be found at : http://www.gov.uk/government/organisations/companies-house

The trend of the property market:

To describe the trend of the London property market, we take as a source “Rightmove” the leading property portal in the UK, which shows increases in several areas, from the point of view of prices, demand, and quantity of transactions carried out.

It also provides the exact segmentation of the ‘typical’ buyer. Let us look specifically at the quantification of the increases recorded in December 2019 compared to the same period last year:

(a) As far as property prices are concerned, they recorded an increase of 23% ;

1. b) The demand for real estate increased by 15 % ;
2. c) The number of closed transactions rose by 7.4 per cent.

As far as buyer segmentation is concerned, major increases were recorded in the following two segments:

1) purchase for investment or second property +1.9% ;

2) luxury real estate +3.9% .

Conclusions :

From this overview it can be deduced, that after the uncertainty linked to the catastrophic and speculative apocalyptic scenarios envisaged in the event of an unordered exit of the United Kingdom from the European Union, with the reappointment of the government led by Boris Johnson such a scenario is no longer plausible or feasible and has boosted investor confidence to buy into the London property market.

The Exchange Rate:

Such investments are also aided by a relatively low GBP price in the market, albeit one that has risen dramatically over the same period last year against all other major currencies.

Indeed, an investor in the decision making process considers all the risk factors associated with the investment itself; one of which is the exchange rate.

Applicability:

Let’s say, for example, that you want to buy a property that will need to be paid off in a few months’ time, the biggest risk could be that of an increase in the purchasing power of sterling against the currency you hold most in your financial portfolio.

To mitigate this risk, through a specialised company, we offer our clients the purchase of the entire sterling countervalue of the investment, fixing the exchange rate at only 10 % of the total countervalue that will be purchased.

The exchange rate is fixed for 12 months from the time of subscription.

On the trend of the exchange rate of sterling and more specifically GBP/EURO we will talk about it later, when the definitive trend data referring to 2019 will be provided with equalised values to 2020.

http://www.forexrate.co.uk/charts/gbpeur.php

Brexit is a reality! It has been the topic that has kept investors in suspense for a long time, but not everyone. The most daring over the previous six months, taking advantage of the wave of uncertainty, have found some excellent property investment opportunities, especially in the city of London.

As of last Friday, the United Kingdom is no longer part of the European Union and negotiations have been going on for a few days. How will the real estate market change? What will be the consequences of Brexit? To answer these questions, we must first look at the facts that have happened in order to predict a trend, what in statistics is called the equalised trend.

-Facts :

The flight from the financial centre of the world’s major players did not happen, nor did the collapse of the pound against the other major world currencies. Unemployment in the UK stands at 3.8% and specifically the city of London is at its lowest level in a decade .

A number of European investment funds in the previous two months finalised the acquisition of major assets in central London and growth in terms of UK Gross Domestic Product in 2019 was 1.3%, exceeding forecasts of 1.2%.

For many institutional investors, leaving the European Union is seen as an opportunity, stemming from government measures that the Prime Minister has stated he will take.

These include:

(a) the decrease of corporate tax to 17 %;

b) raising the minimum wage (already a law in force); c) deregulation of the parameters imposed by the European Union in financial matters.

With the start of the negotiations, Boris Johnson declared that the only agreement that will be signed between the two blocs will be the one concerning trade based on free trade; the same type of agreements that the EU has signed with countries such as Canada and Australia

Will this be possible? Will the European Union grant such an agreement? The answers to these questions we will only have at the end of the negotiations, but an important clue can be provided by the UK’s trade balance figures:

a) Trade between the EU and the UK accounts for 38 % of the UK trade balance;

b) The EU country with which the UK trades most is Germany with a transacted value in 2019 of £70 billion in terms of goods imported from the UK itself;

c) 35 % of ‘just in time’ industrial production for major Franco-German brands takes place in the UK.

-Conclusions:

From these confirmed macro-economic data, it can be deduced that a no-free trade agreement, i.e. Brexit no-deal, would damage the two strongest countries in Europe (UK and Germany) with negative repercussions on the economies of both .

A most likely free trade agreement will allow the respective blocs to continue their functionality on the markets in terms of foreign trade, but at the same time it will allow the UK to implement policies to attract investment from global players, no longer violating regulations that are prohibited within the EU, as the same prohibitions are included in the treaties between the countries themselves. All information on the negotiations can be found at: http://www.gov.uk/transition.

As far as the trend in the London property market is concerned, the relevant data was set out in the previous article and the trend for the year 2020 is positive. We will discuss the trend of the London real estate market, with regard to the first quarter of 2020, at the end of the quarter when the data will be made official.