Historically it was common practice for non-UK residents to own UK residential property via a non- UK trust and company structure which provided the advantage of being tax free after the additional Stamp Duty Land Tax paid on acquisition.
To counter this, the UK Government has introduced a number of measures to bring this sort of structure within the scope of UK taxes and discourage the acquisition of UK residential properties via corporate structures.
The purpose of this note is to identify the changes made to the UK tax legislation and briefly summarise what structures remain available to provide an attractive tax profile and compare that to personal ownership.
A more in-depth analysis of the changes to tax legislation and remaining structures is available on request.
The relevant taxes
- Annual Tax on Enveloped Dwellings (‘ATED’)
- Stamp Duty Land Tax (‘SDLT’)
- Capital Gains Tax (‘CGT’)
- Inheritance Tax (‘IHT’)
- Income Tax (‘IT)
Qualifying Non UK Pension Scheme (‘QNUPS’)
Dominion is one of very few providers able to offer an overseas retirement scheme offering for ownership of UK residential property.
The Third Dominion Malta Retirement Plan (The Plan) is a pension scheme resident in Malta and registered with the Malta Financial Services Authority to provide pension benefits.
The arrangement would involve a non-UK resident individual funding the Plan which then acquires UK residential property. The non-UK residential individual can occupy the property provided that they pay full market rent for the period of occupation.
The key advantages of the Plan are that it meets the HMRC’s conditions to qualify for statutory exemptions to CGT and IHT and it therefore outside the scope of the new charges introduced.
For completeness it is worthwhile looking at the advantages and disadvantages of personal ownership of the UK residential property.
There are additional advantages and disadvantages for all of the above structures that should be considered on a case by case basis. These should be discussed with the Dominion Technical Team as required.