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23 November 2017

Budget 2017: Capital Gains Tax update – are you exposed?

Budget 2017: Capital Gains Tax update – are you exposed?
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The Chancellor has just announced significant changes to the tax treatment of offshore property transactions. Sellers will now pay corporation tax on their gain from April 2019, regardless of whether they are UK resident.

Impact

This is likely to lead to a significant increase in offshore real estate transactions in the run up to April 2019 as funds seek to realise gains in a tax-free manner. During this period we will work with our clients to advise them on mitigating any tax and transactional risk exposures.

Residency

A significant tax charge can arise where the seller has not been seen to sufficiently ‘manage and control’ their offshore residence position. We will work with our clients and their advisers to get underwriters comfortable with the existing structure.

Trading vs Investment & Transactions In UK Land

Insurance can cover the seller and/or the buyer. The question is whether the seller had the intention of holding the property on investment account (not subject to Capital Gains or UK corporation tax) or on trading account (subject to UK corporation tax and appropriation charges).

Offshore Collapse Structures

The buyer can purchase insurance to cover post completion restructuring to move the property into the buyer’s group directly.

Funds End of Life

Gallagher can advise on insuring residual tax and contingent liabilities arising out of all previous disposals.

Real Estate Transactional Risks

Gallagher’s real estate transactional risks team can provide tailored advice in order to mitigate potential tax risks arising out of corporate real estate transactions. The Gallagher team comprises specialist real estate insurance and legal advisers who are able to keep you abreast of the latest developments in light of the changing UK tax environment. We understand our clients’ key motivations behind offshore real estate transactions and work closely with them and their advisers in order to efficiently mitigate tax and transactional risks.

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