Transfer UK property to offshore company - UK CGT & stamp duty?

Question:

I want to transfer a UK property from my name to an off shore company that I own, will this be exempt from stamp duty and CGT. I propose transferring it for nil consideration

Answer:

The transfer of the property to the offshore company would be a disposal for CGT purposes. Therefore on the basis you are UK resident the transfer would be chargeable to UK CGT.

The fact that you are transferring the property for nil consideration would not be an issue as you would be classed as connected to the company. As such the transfer would be deemed to be made at market value. Therefore the gain would be calculated as usual with the annual exemption offset (if not otherwise utilised) and the remaining gain charged at 18%.

In terms of stamp duty, usually this is based on the actual disposal consideration. If the property was gifted there should be no consideration and therefore no Stamp Duty (Land Tax) charge.

However if the transfer is to a company there is a special provision which provides for stamp duty land tax to be charged on the market value of the property where:

  • a company purchases land from a person with whom it is connected
  • some or all of the consideration consists of the issue or transfer of shares in any company with which the vendor is connected

    Therefore if you received shares in the company the market value of the property transferred could be assessed to stamp duty land tax. Ensure that you take detailed advice on the stamp duty issue, preferably from a solicitor experienced in property conveyancing.

    About the Author

    Lee Hadnum
    The Author of this article is our site Editor, Lee Hadnum. Lee is a rarity among tax advisers having both legal and chartered accountant qualifications. After qualifying a prize winner in the Institute of Chartered Accountants exams, he also went on to become a chartered tax adviser (CTA).

    He worked in Ernst & Youngs Entrepreneurial Services department for a number of years before setting up his own tax planning practice. He is now a full time tax author.

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    About the Author

    Lee Hadnum The Author of this article/answer is our site Editor, Lee Hadnum. Lee is a rarity among tax advisers having both legal and chartered accountant qualifications. After qualifying a prize winner in the Institute of Chartered Accountants exams, he also went on to become a chartered tax adviser (CTA).

    He worked in Ernst & Youngs Entrepreneurial Services department for a number of years before setting up his own tax planning practice. He is now a full time tax author.

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    i) Please note that the articles/answers contain general guidance only and do not constitute accountancy, tax, investment or other professional advice.

    ii) The contents of this article/answer are for information only and are intended to assist readers in identify any tax planning opportunities that may be available to them. The information contained in this answer is not intended to be a substitute for taking proper taxation advice and should not be relied upon in this way. Always consult a qualified accountant or taxation adviser. Your situation will then be looked at individually and specific advice relevant to your circumstances can be given. The Expert does not accept responsibility for any loss arising as a result of reliance on any information contained in this answer.

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