UK real property

UK real property is often purchased by or for international private clients for personal use, investment or trading purposes. Where individuals are non-UK resident or UK resident but non-UK domiciled (non-dom), it has been common practice to hold UK property indirectly through offshore structures for tax, probate and privacy reasons. To increase the tax intake on UK property held through structures and to increase transparency, the government has introduced a wide range of measures aimed at those holding UK real property indirectly.

This subtopic focuses mainly on the taxation of residential property acquired for personal use by or on behalf of non-resident and UK resident non-doms, but also provides introductory guidance on investment and commercial property taxes.

Taxes on buying, holding and disposing of UK property

To tackle avoidance various new and revised taxes on buying, holding and disposing of UK property have been introduced or announced since 2011. These measures are outlined below and relate principally to the introduction of the annual tax on enveloped dwellings (ATED) and to further stamp duty land tax (SDLT) and capital gains tax (CGT) charges. The measures

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All in? Court confirms when a settlement is 'made' for the purposes of excluded property (Accuro Trust (Switzerland) SA v The Commissioners for HMRC)

Private Client analysis: This case considered the meaning of 'relevant property' under the settlements regime of the Inheritance Tax Act 1984 (IHTA 1984) and, in particular, the time at which this definition is to be tested. The question arose as to whether the trustees of an offshore trust established by a non-UK domiciled settlor were subject to the UK settlements regime in respect of property added to the trust after the settlor became deemed domiciled in the UK, or whether they were exempt from such charges as the trust consisted solely of excluded property. The First-tier Tribunal (FTT) held that whether trust property is excluded property is based on the status of the trust at the time that it was established, not at the time that the property in question was added to the settlement. As a result, the trust in this case did consist solely of excluded property and no inheritance tax (IHT) charges arose as a result of either the ten-year anniversary or capital distributions. The FTT was also asked to consider whether their jurisdiction was appellate, or supervisory only. The FTT held that, while their jurisdiction was supervisory, the questions raised by the trustees were relevant in establishing whether HMRC had acted reasonably and that the outcome (ie that the paid IHT should be refunded and that no further IHT was due) would be the same in either case. Written by Katherine Willmott, senior associate solicitor at Foot Anstey LLP.

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