The UK Government has announced proposals that, with effect from 6 April 2017, foreign companies and other non-natural persons holding UK residential property will have to disclose the ultimate beneficial ownership of the residential property.
Whilst the Government is now only at the consultation stage and no draft legislation has been published, the intention is that UK property will be regarded as transparent for inheritance tax purposes, regardless of the domicile status of the underlying beneficial owner or settlor.
In practical terms, we envisage that the Land Registry will require within a reasonable time all foreign companies or entities that hold the legal title to residential property in the UK to submit details of the underlying beneficial ownership. There is a proposal that a foreign companies beneficial ownership register will be maintained and consultation as to the degree to which this should be made public.
Whilst the consultation is ongoing and we await the draft legislation, individuals and trustees of UK residential property, the legal title to which is held in companies or other corporate structures incorporated or based overseas that are concerned about the changes, may wish to consider their restructuring options well in advance of the anticipated April 2017 deadline. Early planning may help avoid rushing important restructuring decisions that may involve potentially lengthy liquidations of existing entities to move assets as part of such restructuring. In many cases, this may also require landlord’s consent to assign any legal interest in leasehold property.
The Government consultation and further background information can be found here.