From 6 April 2017, any residential property held in an overseas company will be subject to U.K. Inheritance tax.
This is the latest act by the U.K. Government aimed at discouraging international investors from buying residential property in the name of an overseas company.
This change follows hot on the heels of the introduction of the Annual Tax on Enveloped Dwellings, known as ATED and the extension of Capital Gains Tax to Enveloped Dwellings both introduced in 2013.
Despite the ever increasing ATED charge and the application of CGT, comparatively few people chose to transfer their residential property out of its company "envelope" and into their own name. A key motivator being that as non U.K. Residents, they would not have to pay IHT on the value of the property if held in the name of a non U.K. Company.
However, with the changes to the inheritance tax regime which will see inheritance tax applying even if residential property is held in the name of an overseas company, all that is likely to change.
In this note, we take a quick look at the Land Registry stats and introduce the UK Real Estate team and key people who can assist in the de-enveloping process.