Changes coming into force from April 2013 mean that those who have purchased a home in the UK through a foreign holding company structure may be subject to new taxes, namely:
- An annual tax charge on residential properties valued in excess of £2 million. The amount of the annual tax charge ranges from £15,000-£140,000 depending on the value of the property as at April 2012. The valuation is reviewed and updated every five years thereafter and the charge adjusted accordingly.
- A capital gains tax, which applies from April 2013 on disposals of UK residential property worth more than £2 million as at April 2012. The tax will be levied on all gains above the valuation of the property as at April 2013 at a rate of 28 percent.
- A new rate of stamp duty of 15 percent (as opposed to 7 percent for individuals) for purchases of UK residential property worth more than £2 million. This valuation refers to a single residential dwelling and does not therefore apply to housing developments which consist of a number of lower value properties. The new rate will apply where the effective date of the transaction is on or after the date that the Finance Bill 2013 receives royal assent (likely to be around July 2013).
The changes broadly apply to UK residential property worth more than £2 million acquired by "non-natural persons"—i.e., companies, partnerships with at least one company member, and collective investment schemes. Property owners will be required to submit their own valuation to the tax authorities (self-assessment). There are a number of exemptions, which may apply in specific circumstances, but individual legal and tax advice should be taken to review existing UK residential property structures within this valuation band given the potential ongoing financial impact of these changes to the law.