Following on from the earlier consultation, the Government has announced that it intends to press ahead with the world’s first public register that will require overseas companies buying UK properties to disclose who the ultimate owners of the companies/properties are. The intention is that the register will go live by early 2021 and will apply to the acquisition of both UK residential and commercial properties.
Draft legislation will be published this summer with the register to go live (and public) in 2021.
The clear intention of the register is to remove the opportunity to utilise offshore companies to launder the proceeds of crime by acquiring properties in the UK. An obvious side effect of this is that all investors interested in acquiring UK properties via offshore corporate vehicles will no longer be able to maintain their anonymity and privacy.
It is worth noting that the register is intended to be a public register and is aimed specifically at offshore ownership of UK situs real estate assets. No doubt, in time when there is draft legislation there will be further guidance on how the register will work in respect of more complex arrangements such as discretionary trusts and nominees. Overseas purchasers of UK property should be aware that from 2021, such details are likely to be a matter of public record.
Taxpayers may therefore wish to examine their holding structures now to ensure that the tax advice sought is up to date and where necessary, consider whether they should utilise the Worldwide Disclosure Facility to put their affairs in order before the register is established.
The public register follows the introduction of a number of provisions, including:
- the ATED regime;
- the Non-resident Capital Gains Tax on UK residential property;
- the current consultation relating to Capital Gains Tax on commercial property and property rich entities;
- the recent changes to inheritance tax in respect of overseas companies holding UK residential property; and
- the current consultation to bring overseas companies into the scope of UK corporation tax.
Each of the above have eroded or have the potential to remove any real tax benefits.
It is essential that investors check that their planning is up to date, tax compliant and still relevant in the light of these developments. For further details on the above and how we can assist you and your clients regarding property taxes and whether an offshore holding structure is still beneficial, please contact Caroline Fleet or John Hood on 0845 4900 509.