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Property

Major changes to the UK’s property tax regime and the Crown Dependencies’ Double Tax Agreements have caused some overseas property investors to sit up and take notice. But the attractiveness of UK property to international investors and the use of the Channel Islands as a pathway to it means the City and the islands continue to offer the ultimate blend of flexibility and benefits Words: Alexander Garrett

WHEN PHILIP HAMMOND, then

UK Chancellor, announced in his 2017 Autumn Budget that from 6 April 2019, non-resident investors would have to pay Capital Gains Tax on disposals of all types of UK real estate, it sent a ripple of concern around the world of offshore investment. For fund managers, administrators and other professionals in the Channel Islands, these changes threatened to erode some of the tax advantages that investments made via Jersey and Guernsey had traditionally enjoyed. They come at a time when the UK, in light of Brexit, is seeking to redefine its place in the financial services competitive landscape. This is also a time when the outlook for UK property in general has

16 City edition 2020

been clouded by the coronavirus pandemic. It’s not just how people invest that’s having to be revalued, but also the basic argument around what type of property is worthy of investment. Investment in real estate, especially UK property, is big business in Jersey and Guernsey. The Monterey Insight Jersey Fund Report 2018 estimated that, even back then, there were already more than 100 Jersey-based funds focusing on UK real estate, with a combined net asset value of more than $42bn. And, according to Guernsey Finance, in excess of £20bn of property is held in Guernsey-domiciled real estate funds. Until now, the tax benefits offered to overseas investors have been something

of an anomaly, says Richard Daggett, Partner at Ogier. “The UK was, for a long time, an outlier in how it sought to tax property within its borders,” he says. “Seeking to charge overseas investors CGT and Corporation Tax is merely bringing the UK in line with other countries that vie for foreign investment in their real estate sectors.” The UK government’s tax reforms were aimed squarely at levelling the playing field for non-resident and resident investors. The process began in 2015 with the imposition of non-resident Capital Gains Tax on disposals of UK residential property. The latest measures extended that to commercial property – potentially drawing into the net pension funds and institutional

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Profile for BL Magazine

BL Magazine - City Edition 2020  

How well-positioned are the Channel Islands to support the UK’s post-coronavirus economic recovery? How has the pandemic impacted the UK pro...

BL Magazine - City Edition 2020  

How well-positioned are the Channel Islands to support the UK’s post-coronavirus economic recovery? How has the pandemic impacted the UK pro...

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