Taxation Changes to UK Property

Taxation changes affecting property holding structures will come into force in April 2017, how will these changes affect you?

Frank Strachan, Partner and Head of Tax at Edwin Coe LLP, advises and recently reported the following:

It has been a busy start to the year and this trend looks likely to continue in the run up to the April 2017 taxation changes and beyond. Clients are starting to grasp the enormity of the changes in particular those overseas clients who hold UK property via a non-UK structure (whether directly/indirectly).

What are the consequences of not addressing the property holding structures pre 6 April 2017? Whilst each case needs to be reviewed on its individual merits, in basic tax terms, one of the major consequences will be:

Inheritance Tax (IHT)

Exposure to UK Inheritance Tax under the new rules where an interest in securities (typically shares in a non-UK resident ‘close company’), a partnership, or loan relationship derives its value directly or indirectly from UK residential property.

This results in a number of issues for individuals who hold UK residential property via a structure and swift action needs to be taken in order to review such arrangements to establish the impact of these changes and what options are available to manage the position.

HMRC prosecution figures – 2016

HMRC successfully prosecuted 679 individuals during 2016 securing a combined jail time of 730 years.

Stamp Duty Land Tax (SDLT) – time for the Government to listen?

Research has revealed that the costs of SDLT for a buyer purchasing a home at £2m would cover the rental costs of that property for two and half years! For properties in excess of £5m, this equates to rental payments for four years. Time to remove the punitive 3% SDLT supplemental charge?

UK Government rules out public register for Crown Dependencies

An influential Government select committee called for UK Overseas Territories and Crown Dependencies to create a central public register of beneficial owners, which was subsequently rejected by the Government. The Government’s view was reached on the basis that all the relevant territories had signed up to the new global standard on automatic exchange of beneficial ownership information.

HMRC dismisses expense claims

HMRC has provided a list of some of the crazier expenses claimed in 2014/15 tax returns, including:

  • a builder claiming Armani Jeans as protective clothing
  • food for a ferocious Shih Tzu guard dog
  • international flights for dental treatments
  • the cost of regular Friday night bonding sessions in the pub
  • a garden shed
  • caravan rental for the Easter weekend.

For further information on Taxation and the services that Edwin Coe LLP has to offer please go to: Contact Edwin Coe

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