With the changes to the taxation of UK residential property, we have seen a great deal of "de-enveloping" with properties formerly owned by companies reverting to individual ownership. However, offshore structures continue to hold UK property for a variety of reasons other than tax, including privacy.
2021 will see a further dramatic change, when the UK government implements a public register recording the beneficial ownership of UK residential properties.
In a timetable published last month it was announced that the first draft of the legislation will be published in the Summer and follows a consultation on the topic in April 2017, the outcomes of which have yet to be revealed.
The Government's aim is to reduce instances of offshore structures being used to purchase UK property, in order to increase transparency in the UK property market and to minimise the risk of UK property being acquired using the proceeds of crime.
However, many have criticised the decision to make the register public, worried that it will impact on privacy. Those in the public eye and other high net worth individuals are not happy to have the location of their UK homes made public amid safety concerns.
The publication of the timetable follows a debate in the House of Lords earlier which culminated in the House voting against requiring six overseas territories to implement publicly-accessible registers of companies' beneficial ownership. Lord Flight, a commissioner of the Guernsey Financial Services Commission and director of Investec Asset Management Ltd, was vocal in his criticism of public registers in that debate.
Hansard reported Lord Flight's comments: "it is interesting to note that law enforcement agencies do not support public registers, particularly in such territories, as they do not improve law enforcement capabilities … tax authorities do not support public registers either, as people report less candidly than when information is available only to public authorities." Lord Flight also raised concerns that public registers of beneficial ownership "facilitate identity theft".
Further details will follow when the first draft of the legislation is published this Summer.
