Non UK Resident Expat Property Fund Warning

Published / Last Updated on 05/11/2019

If you are an expat or non-uk resident that holds UK property funds in an offshore bond you may be hit with an extra tax charge when you sell your holdings.

New legislation introduced by HMRC on 6 April 2019 means that some UK property funds purchased by non-UK residents are now subject to capital gain tax (CGT) on disposal.

This means capital gain tax for non-UK residents not only on direct property investment but also indirect investment through vehicles such as collective investment vehicles such as offshore investment bonds that are considered to be UK property rich.

HMRC defines UK property rich funds as those having over 75% of their gross asset value invested in UK property.

Impact on offshore investment bonds is that the offshore bond provider is the legal and beneficial owner of the investments held within the bond, therefore the funds will be deemed to be held by a non-UK resident anyway.

Corporation tax may then be paid on investment fund gains as the offshore bond provider is usually a limited company, rather than an individual that pays capital gains tax.

This corporation tax charge will then likely either reduce your investment performance of you may face an additional charge on your policy.  These charges cannot be offset against other tax or losses.

Get advice from your existing adviser or contact us.

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