Business Tax, capital gains tax (cgt), Personal tax, Property, Tax Planning

Tax, high value property and the shape of things to come

By RJP LLP

The morality of what is described by David Cameron as ‘aggressive tax avoidance’ is big news right now after the debacle with Jimmy Carr and his participation in the K2 scheme. Celebrities and the very wealthy are clearly being targeted as HMRC continues to seek ways to improve its incoming revenue levels.

Over recent years, the high end property market in London has seen non-UK domiciled individuals making expensive purchases through offshore companies. This has had a number of advantages – confidentiality, avoidance of inheritance tax and capital gains tax (CGT), and reduced stamp duty land tax (SDLT) by the purchase of shares in a company owning property rather than the property itself, to name a few.

In the March 2012 Budget, the Government announced the introduction of new anti avoidance rules to prevent the avoidance of SDLT and CGT on the purchase of UK residential property by ‘non-natural persons’.

The SDLT increase was launched with immediate effect from 21^st March 2012.

15% SDLT for non-natural persons

This affects investors buying UK residential property where the consideration exceeds £2m and the purchase is made by a ‘non-natural person’.

A non-natural person is a company, a partnership (where at least one of the members is a company) or a collective investment vehicle. Trusts are specifically excluded as non-natural persons for this purpose.

In the event of such a purchase, the rate of SDLT payable is now 15%.

Further charges to be announced

On 31^st May, HM Treasury also issued a consultation document covering proposed new rules for the taxation of UK residential property held by offshore ‘non-natural persons’, which is likely to come into effect from April 2013.

The aim is to encourage those who have, for tax reasons, put high value UK residential property into offshore non-personal ownership, to take them out and own them personally.

It is proposed that there will be both a CGT charge and an ongoing annual levy.

This time, the impact will be felt amongst owners of UK residential properties where the owner is an ‘off-shore based non natural person’. The Treasury has published the following details in relation to these new rules:

– For the purposes of the annual charge non-natural persons will have the same meaning as for SDLT above, but will also include trusts, personal representatives and offshore entities which allow property to be held;

– Firstly there will be an extension to CGT to include gains on disposals of UK residential property by non-UK resident non- natural persons (the legislation did not specify that this change would only apply to property above a certain value); and

– Secondly the Government will consult on the introduction of an annual charge on UK residential property owned by non-natural persons. This charge is likely to begin at £15,000 p.a. for properties worth between £2m and £5m.

The introduction of both of these, quite draconian, new rules demonstrates for clients that it is clear the Government is taking serious action against what it regards as “individuals who have put such high value property into envelopes for reasons including tax avoidance”.

If you currently own expensive UK residential property through an offshore entity, it is advisable to await the outcome of the consultation before deciding on the best course of action. Care will need to be taken in moving property as this may have SDLT, CGT, inheritance tax and income tax implications.

To discuss property tax and capital gains tax issues like this in more detail, please contact Lesley Stalker by emailing las@rjp.co.uk.

How to get onboard with RJP

Talk to us

Have an initial discussion with a member of the RJP team to identify ways we can enhance your business's growth with our comprehensive support and strategic advice.

Hassle-free migration

Choose RJP and we'll smoothly manage all transitions, handling paperwork, coordinating with your current accountant, and ensuring no deadlines are missed for a worry-free experience.

A pathway to growth

Finally, we will send you the required documents to sign and return, leaving you to continue leading your business, backed by our abundant, responsive advice and support.

2024 Budget in depth – Key changes to capital gains tax

Business Services, Business Tax, Personal Taxation

Budget 2024 In depth – Inheritance tax changes

Business Services, Business Tax, Personal tax

Budget 2024 – What are the new tax rules for non-doms?

Personal tax, Probate and Inheritance Tax

Here’s what our clients have to say

Hear directly from our clients about how RJP's personal, straightforward approach has made all the difference in their business and personal success.

"I just wanted to drop you a short note to say how grateful I am for the support that RJP has provided over the past 4 weeks while our Financial Controller was away. I struggle to comprehend how much work your staff get through during their weekly visits and they are always a pleasure to have around the office."

"I wanted to write and express our gratitude for your help and hard work in getting Probate through and settling all the taxes. I am so pleased that we selected RJP, as your professional help and updates throughout this process have been invaluable. If at any time in the future Probate assessment may be needed, you will be our first port of call. Once again, many thanks to the whole team."

"I would like to take this opportunity to thank you very much for the amazing job you have done navigating us through this whole process. My family and I also really appreciate the care and compassion demonstrated by you and your team in every dealing. Our thanks to everyone."

"Just a quick e-mail from me to thank you for achieving the target for producing the draft accounts – it is very much appreciated and gives a first class impression of your firm. Many thanks."

"RJP provide our company with a complete service which takes the stress and strain away from the day to day running of our accounts! Their understanding of our business and their patience and advice is invaluable."

Get the latest tax tips to your inbox every month

FAQs

At RJP, we understand that keeping a finger on the pulse of your business's health is crucial. That's why we offer management reporting services—think of them as a regular health check for your company. These insights show you the real-time performance of your business, helping you make informed decisions to nurture and grow your enterprise.

We love seeing your business flourish! Growth and improvement are at the heart of our practical advice. From the ins and outs of everyday operations to big-picture strategic moves, we're here to offer clear, actionable steps that can propel your business forward.

We know dealing with the issue of compliance and auditing can be less than thrilling. That's exactly why we're here—to handle the complex stuff so you don't have to. We offer comprehensive compliance services, ensuring everything is up-to-date without you having to wade through a sea of regulations.

Absolutely! There's a world of opportunity out there to support your business financially, and we're well-equipped to be your guide. We can help you understand and access HMRC’s tax relief schemes that are relevant to you and your business, making sure you're not missing out on any potential benefits.

When you need us, we're just a call or an email away—no question is too small or too large. We're known for our quick responses and our fixed fees mean you can reach out without worrying about unexpected costs. Plus, we always keep things simple and straight to the point. We're not just your accountants; we're part of your team, ready to support both your business and personal needs.