Key Points

  • the United Kingdom ("UK") government has confirmed its plans to reintroduce inheritance tax to UK non-domiciles ("non-doms") holding UK residential properties via offshore companies;
  • the Finance Bill, which contains the relevant provisions as regards inheritance tax for UK non-doms, is being presented to parliament in autumn and is likely to take effect from 6 April 2017, if passed;
  • we are assisting clients 'de-envelope' their UK residential properties (i.e. transferring the property out of the offshore company's ownership) by way of voluntary liquidation in the British Virgin Islands ("BVI"), the Cayman Islands, Jersey and Guernsey;
  • we are also assisting with related activity at trust level, particularly in Jersey and Guernsey, whether by way of appointments out to beneficiaries or otherwise; and
  • given the imminent date of implementation, the proposed retrospective effect of the Finance Bill and the lead time to complete such transactions, we are once again seeing an increase in the number of properties being de-enveloped by way of voluntary liquidation.

This bulletin is an update to our previous circular dated 25 October 2016 as regards the UK government's previous confirmation that non-doms who hold residential property via an offshore company will be subject to inheritance tax from 6 April 20171. In light of this change to inheritance tax for non-doms, we were actively assisting clients de-envelope their UK residential properties prior to this deadline.

Our experience to date has been that many of these companies have been held by Jersey and Guernsey trusts and we have therefore been assisting with the related restructuring at trust-level through our Jersey and Guernsey offices.

However, the government subsequently decided to 'shelve' more than half of the Finance Bill (including the relevant provisions as regards non-doms being subject to inheritance tax on UK residential properties being held via offshore companies) until after the UK general election. As a result of this delay, a number of clients decided to also shelve their plans to de-envelope their properties until such time as the relevant provisions of the Finance Bill were re-introduced, if at all.

The government has now announced (on 13 July 2017) that the shelved changes to the treatment of non-doms (including inheritance tax) will go ahead in a Finance Bill to be presented to parliament in the autumn. Importantly, the announcements confirm that the changes will take effect from 6 April 2017 as originally intended. As far as we understand, it now seems likely that the changes will become law.

As a result of the reintroduction of these changes and the likelihood of the Finance Bill becoming law (with retrospective effect), we are once again assisting clients de-envelope their properties by way of voluntary liquidation in the BVI, the Cayman Islands, Jersey and Guernsey, and related trust matters particularly in Jersey and Guernsey.


1. United Kingdom Inheritance Tax Changes  

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