Using Corporate Structures to Own UK Residential Property - A Dead End?

October 24, 2016

Historically, UK resident non-domiciled individuals have been able to achieve certain tax advantages through holding interests in UK residential property through offshore companies. In recent years, the UK government has introduced a series of tax changes that have stripped away most, if not all, of the tax advantages previously enjoyed by corporates holding UK residential property. Examples include the introduction of the Annual Tax on Enveloped Dwellings (ATED), the extension of capital gains tax to non-UK residents making disposals of UK residential property and the 15% flat rate of stamp duty land tax (SDLT) for corporate purchasers. A further adverse change to inheritance tax for non-domiciled individuals using offshore corporate structures to own UK residential property will also soon be in force. As of 6 April 2017, the UK government will legislate to ensure that such arrangements will be ineffective for non-domiciled individuals in avoiding UK inheritance tax on the UK residential property, thus removing the last tax advantage of holding UK property through an offshore company.

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