In the 2012 UK budget the government announced proposed changes to the taxation of UK residential property held by offshore entities. The changes, other than stamp duty, if adopted are to take effect from 1 April 2013.

The proposed new regime is intended to discourage ownership through an offshore vehicle and imposes additional taxes on property owned in this manner.


Already in place, for new acquisitions of property bought by a company with a value of £2 million or more is the rise in stamp duty to 15%. This applies to both non-UK companies and those incorporated or resident in the UK for tax purposes. The purpose of the legislation is to counter the avoidance of subsequent property stamp duty taxes by arranging for the sale of the property by share transfer rather than re-registration of the actual property to a new owner.


In addition it is proposed to apply an annual charge on properties over £2 million at the following rates:


Annual Charge

£2-£5 million
£5-£10 million
£10-£20 million
£20+ million


The annual charge is to be increased annually in line with the UK consumer price index (CPI)


Whilst capital gains tax is usually only charged to persons resident in the UK for tax purposes, the government are to make an exception for the sale of higher value residential property not owned by a natural person.


Fiduciary are not tax advisers and the information provided above is for information only. However, for clients using a structure to hold UK residential property the implications may be severe and they are advised to obtain professional advice to put in place a tax mitigation strategy.

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.