Today's budget announcement contains a sting in the tail for
investors in UK residential property.
The Chancellor has slapped a massive increase on Stamp Duty Land
Tax (SDLT) increasing it to 15% when residential property worth
£500,000 or more is purchased in the name of a
company. Previously, the rate payable was 4% for residential
properties worth over £500,000 and up to £1m and 5% for
residential properties worth over £1m and up to
But he hasn't stopped there. The Chancellor has also
extended the Annual Tax on Enveloped Dwellings (ATED) regime so
that with effect from 2015 all residential properties worth more
than £1m owned by companies will be subject to both ATED and
Capital Gains Tax on Enveloped Dwellings (CGTED). In 2016, he
will cast his net even wider and all residential properties
worth more than £500,000 owned by companies will be subject
to ATED and CGTED.
It is important to remember that these changes only apply to
residential property in the UK and there are a number of exemptions
from the ATED / CGTED regime, including:
Properties held by a company in its capacity as trustee of a
Properties acquired in the course of a property development
Properties let out as part of a property rental business where
let to third parties on a commercial basis (in most cases this will
exempt properties acquired as "buy-to-lets")
Additionally, the UK government is also still consulting on how
best to introduce the capital gains tax on future gains made by non
residents disposing of UK property and it is proposed that this new
tax will be introduced in April 2015.
So where you already own UK residential property in an offshore
company, you have three options available to you and plenty of
time to think about them:
De-envelope the property;
Or consider restructuring.
In taking no action, and leaving the property in the offshore
company, it will mean that you are unlikely to be exposed to UK
inheritance tax (IHT) and will face no additional SDLT, but you
will in the future be liable to ATED and CGTED on the property.
The process of de-enveloping involves transferring the property
out of the company into your personal ownership. In doing
this, there would be no ATED or CGTED going forward, but on the
death of the individual owner, you would pay IHT at the rate of 40%
of the value of your UK estate (which would include at the very
least the Property) over the nil rate band.
The last (but not least) option is to consider holding the
Property directly in an offshore trust. That way the Property
can be held by trustees and this option would mean that there
is unlikely to be any ATED or CGTED. IHT will remain a
Any action (or indeed inaction) does need careful consideration
and as well as needing legal advice will also require tax
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The process for obtaining planning permission for development of property in the Cayman Islands has been updated as a result of the latest revision of the Development and Planning Law and accompanying regulations (July 2015).
In principle, when the parties agree to arbitrate, they shall be
bound by that agreement. It should therefore follow that when a
party initiates arbitration proceedings, the other party - the
respondent – will avail itself of the opportunity to present
its case and participate in the proceedings.
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