UK: A New Regime For UK Residential Property Ownership - How Appleby Can Help

Last Updated: 20 December 2012
Article by Ian Gobin and Michael Stanford-Tuck

The long awaited draft Finance Bill for 2013 has finally been published, providing further information as to the way UK residential properties valued at over £2 million will be taxed from April 2013 in the form of an increase in stamp duty (SDLT), the proposed annual charge (now called the Annual Residential Property Tax) and the extension of Capital Gains Tax on a disposal.

The aim of this note is to highlight how Appleby may assist you and your clients in relation to HMRC's changes to the taxation of UK residential properties valued at over £2 million that are held in offshore structures that you administer.

Typically investment into such high-value UK residential properties has involved the use of an offshore holding company/offshore trust. This simple structure has avoided many forms of UK taxation, other than normal SDLT on purchase and the usual local property rates and taxes. This has changed in a way that will have far-reaching impact on the holding and purchase of UK residential property valued at over £2 million after April 2013.

You will no doubt have received briefing notes on the aspects of the Finance Bill from UK advisors. Our summary is set out below.

The Changes

1. The rate of stamp duty (SDLT)

The SDLT position for the purchase of UK residential properties valued at over £2 million is as follows:

2. The charge to UK capital gains tax

A charge to capital gains tax on any gain arising on sale is to be extended to a disposal by any non-UK company or non-natural person. Non-resident individuals would not pay capital gains tax, and many UK resident persons would not pay capital gains tax if the property was their principal private residence.

However, HMRC are considering extending the capital gains tax charge to UK residents, which would apply regardless of any lower rates that may currently apply to them. A 28% rate of capital gains tax will be levied on property gains and taper relief on the sale of properties just over the £2 million threshold will apply. Only gains accruing after 6 April 2013 will be subject to the capital gains tax, so automatic re-basing has been included in the proposals.

The definition of non-natural persons is the same as for SDLT and Annual Residential Property Tax purposes and specifically excludes trustees. So capital gains tax will not apply to the sales of properties over £2 million held by trustees. And the sale of shares in a company owning UK residential property valued at over £2 million will not be subject to capital gains tax.

The actual draft legislation on the capital gains tax aspects will not be published until January 2013.

3. The Annual Residential Property Tax ("ARPT")

This is perhaps the most far reaching of the changes and is designed to encourage the dismantling of corporate holding arrangements (called "de-enveloping") by imposing an ARPT on a company which owns UK residential property valued at over £2 million and it will apply as from April 2013. The ARPT depends upon the value of the property:

The first valuation date has been set at 1 April 2012 and revaluations will then take place every five years. HMRC is to introduce a clearing system whereby individuals can appraise the value of their property themselves and ask HMRC to agree to the valuations prior to filing the ARPT reporting form.

An ARPT reporting form must be filed annually or within 30-90 days where a property becomes subject to the ARPT charge during the year. The first annual filing date is 1 October 2013 for 2013/14 and thereafter 30 April of each tax year.


A number of exemptions to the 15% SDLT rate, the ARPT and the extension of capital gains tax will apply to businesses and investors, these are as follows:

  • property developers - without the need for a 2 year qualifying period.
  • properties let to unconnected tenants.
  • properties purchased for an employee, provided the employee has an interest in the company of less than 5%.
  • properties which are deemed farmhouses and are actually occupied by the farmer tending to the farmland.
  • properties held for charitable purposes.
  • properties which are deemed to be accessible to the general public.

Where an exemption applies, annual ARPT reports must still be filed and the relief claimed.

4. Potential Solutions

What next? Although the proposals are somewhat watered down from those announced in March 2012, you need to take action now. Some strategies have started to emerge involving at a basic level the liquidation of any offshore corporate structures prior to April 2013 and the holding of the properties through nominees to ensure continued confidentiality in respect of the UK Land Registry. However, the difficulty here is that the avoidance of one set of rules and taxes may simply bring another into play. We recommend that you speak with your UK tax consultant at the earliest opportunity.

How can Appleby help with this? We have put facilities in place which, with the approval of the relevant client, may include one or more of the following:

1. The carrying out of an assessment and review of the client's position to ascertain whether the changes will have an impact of the assets involved, and any UK property assets in particular;

2. The sourcing and dissemination of expert UK tax and property advice as may be required;

3. The provision of dedicated liquidation services where the dissolution of the offshore corporate structure is desirable; and

4. The co-ordination of such re-organization steps as may be dictated by the proposals generally.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Ian Gobin
In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.