United Kingdom: tax as a condition of privacy
As reported by the British media, more than 200 high net worth foreigners have chosen an option of paying a special tax of GBP 218,200 in order to release themselves from declaring their ownership of luxury real estate in the UK. The title to such property is usually held by offshore companies belonging to such individuals. The ownership of real property by means of an offshore company is lawful, provided that the said tax is duly paid.
According to the information of the HMRC, the owners of large mansions choose paying the annual tax instead of registering their London estates directly in their names. This can be explained by the fact that confidentiality of ownership is much more important thing for the owners of such property (valued over GBP 20 million) than the requirement to pay tax.
A special tax known as the Annual Tax on Enveloped Dwellings (ATED) is applied to real property owned by persons other than individuals, e.g. by offshore companies. It was introduced by the Government in 2013.
According to the HMRC offshore companies currently own 210 real property items worth more than GBP 20 million each. It is notable that since the ATED was introduced, their number has decreased less than on 5%.
In order to make the high-income foreigners stop hiding themselves behind corporate structures the Government raised the tax on the most high-priced houses from GBP 140,000 at the time when the tax was introduced to GBP 218,200 in 2015. The tax is expected to be raised again up to GBP 220,350 in April 2017.
Besides this, the Government intends to close the gap which allowed non-domiciled foreigners to avoid the inheritance tax on property owned through offshore structures. For this purpose, there will be introduced a 15 percent stamp duty on new property items acquired by using offshore companies.Tags: UK