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Insight

Residential property in a corporate envelope - new tax thresholds

Nick Beecham
19/03/2014
Dwellings held by offshore companies and unit trusts (for occupation by the ultimate owner or family members) worth no more than £2m have, until now, escaped liability for ATED, the new CGT and the Dwellings held by offshore companies and unit trusts (for occupation by the ultimate owner or family members) worth no more than £2m have, until now, escaped liability for ATED, the new CGT and the 15% rate of SDLT.  From tomorrow, the 15% rate of SDLT will apply to the purchase of a dwelling by a corporate body for more than £500,000 (with protection for existing contracts).  ATED and the new CGT will be extended to dwellings worth over £1m from 1 April 2015 and over £500,000 from 1 April 2016.

The lowering of these thresholds inevitably means that more dwellings held in corporate structures will be have to be de-enveloped.  For dwellings worth no more than £500,000, the cost of maintaining a corporate structure will probably outweigh the tax advantages.  In future we are likely to see far fewer dwellings held in this way, except where the IHT advantages are of paramount importance.

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