UK residential property in offshore structures: more surprises from the Government

The Government has confirmed its intention to make UK residential property held indirectly by non-doms through an offshore structure chargeable to UK Inheritance Tax (IHT).  As planned, this will begin on 6 April 2017.

Although the proposal was first announced as far back as July 2015, draft legislation effecting this change was only published on 5 December 2016 – and it contains some surprises.

Get ready for another ATED valuation date

The Autumn Statement on 23 November contained no further detail about how the Government’s proposals for achieving Inheritance Tax transparency for offshore structures from 6 April 2017 is going to work in practice.  However, in rather ominous fashion, the Government did use the occasion to confirm that the changes are going ahead as planned from 6 April 2017. 

Non-doms owning UK residential property through offshore trusts, companies or other vehicles need to get their skates on if they are to get any reorganisations finished by 6 April 2017 (see my blog of 3 November 2016 for one reason why doing so may be desirable).  However, there may be another good reason – some may find their company’s Annual Tax on Enveloped Dwellings (ATED) bill goes up substantially too.  Here’s why.