Annual Tax on Enveloped Dwellings and Americans

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Some of you will have read about the new Annual Tax on Enveloped Dwellings or ATED on UK residential property held through corporate ownership structures. This applies an annual sliding scale of stamp duty land tax on the ownership of any home over £2m held through a corporate structure as well as tax on certain gains. Many ‘non-doms’ had organised ownership of their home through a corporate structure to provide protection from UK inheritance tax. By shifting the ownership of the UK residential property into a non-UK corporation, the non-dom converted their UK asset into a non-UK asset able to pass outside the scope of UK inheritance tax.

However, if this comes at an annual fee, then this changes the economics of the inheritance tax planning completely. We are advising people to review any corporate ownership for residential property and to consider dismantling the structure. The very recent announcement that George Osborne is considering taxing foreign investors on gains in relation to their UK properties whether or not they are held through structures moves the goal posts still further. We await the 4 December Autumn Statement when we hope there might be clarity…

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