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De-enveloping nom-dom properties is finally on the up

After several false starts, there are now signs that the government has finally discouraged companies from using their structure to buy residential property, writes Kate Johnson

29 March 2016

Non-domiciliaries have historically purchased UK residential property using a company structure, usually for privacy reasons or to manage their exposure to UK inheritance tax (IHT).

For several years the government has been trying to discourage this practice, which it refers to as 'enveloping', by making numerous changes to the taxation of UK residential property.

The 2012 Budget introduced a new annual tax on UK residential properties held by non-natural persons, for example companies. The new annual tax on enveloped dwellings (ATED) came into effect from 1 April 2013 for properties with an April 2012 value of £2m or more.

The government hoped that ATED would discourage using companies' structures for avoiding stamp duty land tax (SDLT). SDLT payable on a change of ownership is significantly reduced when a residential property is held by a com...

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