Property holding structures—direct tax treatment of a Jersey property unit trust (JPUT)
Property holding structures—direct tax treatment of a Jersey property unit trust (JPUT)

The following Tax guidance note provides comprehensive and up to date legal information covering:

  • Property holding structures—direct tax treatment of a Jersey property unit trust (JPUT)
  • Income tax treatment
  • Capital allowances
  • Deductibility of tax from rental income—non-resident landlords scheme
  • Controlled foreign company rules
  • CGT treatment of JPUT and its unitholders
  • CGT treatment of a JPUT prior to 6 April 2019
  • CGT treatment of a JPUT on and after 6 April 2019
  • CGT treatment of unitholders
  • Tax residence of a JPUT
  • more

FORTHCOMING CHANGE relating to collective investment schemes: HMRC consulted until 25 October 2019 on draft regulations that amend the rules for taxing non-residents on chargeable gains. The main effect of the amendments is to ensure that exempt investors such as pension funds will not lose the benefit of the exemption when investing in UK property-rich collective investment vehicles. This follows post-implementation discussions with industry representatives, which identified a number of areas where the new rules do not achieve their original intention. The regulations will have effect from April 2019, except certain changes affecting elections, which will apply to disposals made after the regulations come into force.

It can be tax efficient to hold UK real estate as an investment through an offshore unauthorised property unit trust. Such unit trusts are commonly established in one of the Channel Islands (typically, Jersey or Guernsey) or the Isle of Man, but may be established under the law of another non-UK jurisdiction. This Practice Note refers to such property unit trusts, wherever established, as JPUTs (since Jersey property unit trusts are probably the most common form).

It is assumed for the purposes of this Practice Note that UK real estate is held by a JPUT as an investment rather than an item of trading stock. For details of this distinction, see Practice Note: Dealing in property