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UK Consults On New Property Tax

Monday, June 4, 2012

The UK government has launched a consultation on two Budget 2012 measures designed to tackle avoidance and ensure that individuals and companies pay the necessary taxes on high value residential property.

The consultation explores the proposed details of a new annual charge on residential properties valued over GBP2m (USD3m) owned by certain ‘non-natural’ persons (broadly companies, partnerships including companies, and collective investment schemes). It also sets out details of the proposed extension of the capital gains tax (CGT) regime to the disposal of UK residential property by non-resident, non-natural persons. It is envisaged that the CGT extension will apply to residential properties disposed of for more than GBP2m in order to be consistent with the annual charge.

Both measures are part of a package to ensure the "fair" taxation of residential property and to clamp down on avoidance, including through ‘enveloping’, where a corporate package is used to wrap up a residential property as a way of avoiding a Stamp Duty Land Tax (SDLT) charge. It is the government's belief that, as well as being a deterrent to enveloping, the CGT extension will create a more equal tax treatment between UK residents and non-residents.

David Gauke, Exchequer Secretary to the Treasury, said: “The government is determined to take action against those who attempt to avoid paying their fair share of tax on residential property. While most people pay their taxes, there are some who try to avoid paying their fair share. We are determined to clamp down on tax avoidance of all kinds and by introducing these two changes, we are taking action to ensure that everyone pays the tax they owe when buying and selling high-value residential property.”

The consultation will be open for 12 weeks and will close on August 23, 2012. The government will publish a response to the consultation in the autumn. Draft legislation for the annual charge and extension of CGT will also be published in the autumn, and then introduced in Finance Bill 2013.

The Budget also included a 15% rate of SDLT on acquisitions of residential dwellings costing more than GBP2m by certain ‘non-natural’ persons. This measure came into effect at Budget 2012 and will be legislated in Finance Bill 2012.

The annual charge on high value property owned by non-natural persons is scheduled to come into effect on April 1, 2013, and the extension of CGT to gains on the disposal of residential property by non-resident companies will be be effective from April 6, 2013.

Other Budget announcements in this area included a range of other proposals designed to tackle SDLT avoidance, including: an extension of the General Anti-Abuse Rule (GAAR) to SDLT; new legislation to close down an avoidance route/scheme using the sub-sales rules; and a wider consultation on the SDLT sub-sales rules.

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Offshore Trusts Guide: Introduction

The History of Offshore Trusts
Development of Professional Competence in the Jurisdictions
What Future for the Trust?
The New Age of Transparency
The Swiss Association of Trust Companies
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Offshore Trusts Guide: Jurisdictions

Bahamas

Bahamas: Legal Framework and Formation Rules and Fees
Bahamas: 2006 Private Trust Companies Legislation

Barbados

Barbados: Legal Framework and Formation Rules and Fees
Barbados: Supervisory and Licensing Regime and Fees

Bermuda

Bermuda: Legal Framework and Formation Rules and Fees
Bermuda: Supervisory and Licensing Regime and Fees

British Virgin Islands

British Virgin Islands: Legal Framework and Formation Rules and Fees
British Virgin Islands: Special Trusts Act 2003
British Virgin Islands: The Trustee Act 2003
British Virgin Islands: :Supervisory and Licensing Regime and Fees
British Virgin Islands: New Laws on Private Trust Companies
British Virgin Islands: New Private Trust Company Regulations

Cayman Islands

Cayman Islands: Legal Framework and Formation Rules and Fees
Cayman Islands: Supervisory and Licensing Regime and Fees

Cook Islands

Cook Islands: Legal Framework and Formation Rules and Fees
Cook Islands: Supervisory and Licensing Regime and Fees

Cyprus

Cyprus: Legal Framework and Formation Rules and Fees
Cyprus: Supervision, Licensing and Tax

Gibraltar

Gibraltar: Legal Framework and Formation Rules and Fees
Gibraltar: Legislation, Regulation and Supervision

Guernsey

Guernsey: Legal Framework and Formation Rules and Fees
Guernsey: Trusts Law 2007

Isle of Man

Isle of Man: Legal Framework and Formation Rules and Fees
Isle of Man: Supervisory and Licensing Regime
Isle of Man: Uses Clients and Tax Treatment

Jersey

Jersey: Legal Framework and Formation Rules and Fees
Jersey: Supervisory and Licensing Regime
Jersey: Trusts Amendment Act 2006
Jersey: Foundations

Liechtenstein

Liechtenstein: Legal Framework and Formation Rules and Fees
Liechtenstein: Regulation Supervision and Transparency
Liechtenstein: Characteristics of Liechtenstein Trusts
Liechtenstein: Foundations

Madeira

Madeira: Legal Framework and Formation Rules and Fees

Malta

Malta: Legal Framework and Formation Rules and Fees
Malta: The Trust and Trustees Act 2004

Mauritius

Mauritius: Legal Framework and Formation Rules and Fees
Mauritius: Characteristics of the 2001 Trusts Act
Mauritius: Additional Provisions of the 2001 Trusts Act
Mauritius: Tax Treatment

Monaco

Monaco: Legal Framework and Formation Rules and Fees

Nevis

Nevis: Legal Framework and Formation Rules and Fees

Panama

Panama: Legal Framework and Formation Rules and Fees
Panama: Requirements for Acting as Trust Company in Panama

Seychelles

Seychelles: Legal Framework and Formation Rules and Fees

Turks & Caicos

Turks & Caicos: Legal Framework and Formation Rules and Fees
Turks & Caicos: The Voidable Dispositions Ordinance

Vanuatu

Vanuatu Legal Framework and Formation Rules and Fees




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