Background
Many offshore residents who hold residential property in the UK in offshore companies are now taking steps to close down the companies and transfer the properties into their personal names.
Taxes
The rational behind this is that there are in fact no longer any tax benefits from holding a UK residential property in offshore companies. There was previously an exemption from capital gains and inheritance tax on disposal. However, the capital gains tax exemption fell away last year and the inheritance tax exemption disappears on 31st March.
There are of course additional taxes payable on an annual basis on most residential properties held in offshore companies. This tax is know as ATED tax and is a fixed annual charge per annum.
De-enveloping
The best way to transfer these properties at minimal cost is to liquidate the companies and then transfer the properties into the names of shareholders. This process is known as de-enveloping and the benefit of going via the liquidation route is that there is no stamp duty land tax payable on the transfer from the liquidator or shareholders.
Example case
JPC Law is acting for a client, whose intention is to transfer properties into the names of his/her children. Hence, a restructuring of the companies with the shares being transferred to the children would occur. The liquidator would then transfer the properties to them.
If our client would transfer the shareholding in both companies, then the liquidator could transfer the properties and gift them to the children. However, tax issues may occur.
De-enveloping properties and transferring them out of an offshore company into personal names is something Consultant Solicitor, Graham Jaffe, is familiar with and in fact has had several of these under way at the present time.
Graham Jaffe is a Consultant Solicitor at JPC Law.
E: gjaffe@jpclaw.co.uk
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E: enquiries@jpclaw.co.uk
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