Nick Beecham (Property tax partner) and Penny Wotton (Head of private client) made a repeat visit to Jersey last week to meet thirteen banks and trust companies amongst our Channel Island contacts to
Nick Beecham (Property tax partner) and Penny Wotton (Head of private client) made a repeat visit to Jersey last week to meet thirteen banks and trust companies amongst our Channel Island contacts to discuss the response of their clients to the revised draft legislation published by the Government on 31 January which will introduce a new tax regime for high value UK dwellings held within offshore structures.
The new legislation will be of concern for non-domiciled individuals who:
(1) own a UK dwelling worth over £2m which is available for their personal use; and
(2) the dwelling is held in a corporate wrapper (i.e. by a company, partnership (where there is a corporate member) or a collective investment scheme)
The new tax regime will apply from April 2013 and will cause dwellings in this category to attract a new annual residential property tax ("ARPT") and a new CGT charge at the rate of 28% on gains arising on the property from 6 April 2013 ("new CGT") unless the property is transferred out of the corporate structure before that date.
Nick and Penny have developed a structure for de-enveloping properties in a manner which will mitigate all tax charges in appropriate circumstances. This scheme is particularly suitable for non-UK resident owners who own their property through an offshore company (including through certain types of trust) where there is not a significant loan secured over the dwelling.
It is understood that the response of some non-domiciled owners of UK dwellings is to simply accept the new charges or to de-envelope their properties before April to avoid payment of the ARPT and the new CGT whilst accepting exposure to inheritance tax. Others are keen to consider their options in restructuring their property holding arrangements. The de-enveloping structure that we have developed has provided an alternative which is generating much interest and has been confirmed by Counsel to be technically robust.
Details of the new tax regime is set out in our briefing paper. If you own a property which is subject to the new tax regime and would like to discuss the scheme with Nick or Penny they would be happy to hear from you.
Nick Beecham (Property tax partner) and Penny Wotton (Head of private client) made a repeat visit to Jersey last week to meet thirteen banks and trust companies amongst our Channel Island contacts to discuss the response of their clients to the revised draft legislation published by the Government on 31 January which will introduce a new tax regime for high value UK dwellings held within offshore structures.
The new legislation will be of concern for non-domiciled individuals who:
(1) own a UK dwelling worth over £2m which is available for their personal use; and
(2) the dwelling is held in a corporate wrapper (i.e. by a company, partnership (where there is a corporate member) or a collective investment scheme)
The new tax regime will apply from April 2013 and will cause dwellings in this category to attract a new annual residential property tax ("ARPT") and a new CGT charge at the rate of 28% on gains arising on the property from 6 April 2013 ("new CGT") unless the property is transferred out of the corporate structure before that date.
Nick and Penny have developed a structure for de-enveloping properties in a manner which will mitigate all tax charges in appropriate circumstances. This scheme is particularly suitable for non-UK resident owners who own their property through an offshore company (including through certain types of trust) where there is not a significant loan secured over the dwelling.
It is understood that the response of some non-domiciled owners of UK dwellings is to simply accept the new charges or to de-envelope their properties before April to avoid payment of the ARPT and the new CGT whilst accepting exposure to inheritance tax. Others are keen to consider their options in restructuring their property holding arrangements. The de-enveloping structure that we have developed has provided an alternative which is generating much interest and has been confirmed by Counsel to be technically robust.
Details of the new tax regime is set out in our briefing paper. If you own a property which is subject to the new tax regime and would like to discuss the scheme with Nick or Penny they would be happy to hear from you.