1. aesinternational.com
The Autumn Statement 2014
Summary of proposed changes to UK
property taxation
© AES International

2. © AES International
Contents
Part 1 | About AES International 3
Part 2 | About the authors 4
Part 3 | Summary of proposed changes: 5
1. Changes to UK property Stamp Duty 5
2. UK Capital Gains Tax on property for non-residents 6
3. UK Income Tax and personal allowances for non-residents 7
Part 4 | UK Residential property tax exposure 8
Part 5 | Ways to hold UK residential property 9
Part 6 | Potential UK residential property solutions: 10
1. Banking and lending 10
2. Offshore trust and offshore company 10
3. Insurance 11
Part 7 | Resources and articles 12
2

3. About AES International
AES International offers independent
financial advice, offshore banking,
investment management, tax planning
and insurance services to private
clients in 36 countries across Europe
and the Middle East.
We have won in excess of 25 financial
awards including Best Global
Offshore Banking Team of 2014, Best
Private Wealth Manager Adviser in
the United Arab Emirates of 2014
and Best International Financial
Planning Firm of 2013.
AES International also won The
Sunday Times Virgin Fast Track 100
Best Management Team award for
2012, as well as being the fastest
growing financial services organisation
for two years running, which is a
testament to the trust our clients put in
our financial planning services to help
them achieve their goals.
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3

4. Nick is an experienced Private Banking professional with a passion for excellence and a
desire to provide holistic financial solutions for Private Clients.
© AES International
About the authors
Carlton serves High Net Worth and Ultra High Net Worth private clients for AES
International across the Middle East, providing them with independent financial
planning advice that covers their offshore structuring, tax planning and investment
management needs.
Previously, he was with Barclays Private Bank in
London and Dubai advising clients with assets of £5m
to £1 billion on how to protect, grow and plan their
wealth. Before joining Barclays, Carlton worked at
Grant Thornton, a leading UK accounting and tax
advisory practice where he advised families and
entrepreneurs on their wealth typically created
through the sale of their businesses to global
companies including Google, Red Bull Formula 1 and
Blackrock Asset Management. His diverse clients have
included Premier League football players, PGA Tour
golf players, international pop music stars, TV and
media companies.
Carlton Crabbe, Partner
Nick Michaels, Senior Banking Executive
An expert in private banking and wealth management
for expatriates, the value he brings to clients is his
ability to understand them, develop strong
relationships and provide suitable solutions either
personally or through his network of specialists.
Before joining AES International, Nick lead the desk
for the private banking team at Coutts in London,
where he was responsible for offering a tailored and
personalised banking service for Private Clients.
4

5. Summary of proposed changes
1. Changes to UK property Stamp Duty
Buying a UK Property has become cheaper for most people with the changes
announced in the UK Government’s Autumn Statement. The headline grabbing
reform to UK Property's Stamp Duty (SDLT) was a popular move by the Chancellor
and brings the UK into line with Scotland's system of tax on property, an increasing
tax rather than a slab tax based on rigid property price bands.
Under the old system, stamp duty for UK residential property became payable
based on a percentage of the whole value depending upon which band the
property fell into. Under the new system, tax will be payable for the portion of the
price within each band. The new UK property stamp duty rates are as follows:
UK Property SDLT: New Bands Tax Rates
Up to £125,000 Zero
Between £125,000 to £250,000 2%
Between £250,000 to £925,000 5%
Between £925,000 to £1,500,000 10%
Over £1,500,000 12%
For most UK home buyers, these changes to stamp duty will mean a lower level of tax
payable when buying a property. For others, the charge is much greater.
UK Property SDLT: Previous Bands Tax Rates
Up to £125,000 Zero
Over £125,000 to £250,000 1%
Over £250,000 to £500,000 3%
Over £500,000 to £1 million 4%
Over £1 million to £2 million 5%
Over £2 million 7%
© AES International
As a guide, those buying a UK
property for less than
£937,500 will see a reduction
in their stamp duty tax bill.
But those buying over this
level will see an increase,
when compared with the old
stamp duty rates:
5

6. 2. UK Capital Gains Tax on property for non-residents
The government initially warned UK non-residents in 2013 about its intention to tax the
profits they made when they sold their UK property. Now, it has been confirmed. From 6th
April 2015, all gains on property will be subject to 18% or 28% Capital Gains Tax (CGT)
when the property is held personally. Some non-residents already pay CGT because of the
annual tax on enveloped dwellings (ATED) rule.
© AES International
6
Summary of proposed changes (cont.)

7. 3. UK Income Tax and personal allowances for non-residents
There was good news for non-residents though, as the Government decided not to
implement its proposed changes to the personal allowance for non-residents. The changes
that it was consulting on, would have meant individuals losing their income tax-free
personal allowance for 2015/2016. If the proposals had gone ahead, the loss of the personal
allowance (£10,600), would have meant an additional tax bill of £4,240 per person, each
year on their income.
The UK government still believes there is a strong rationale for removing the personal
allowance for non-residents, but says it will carry out a more detailed consultation. There
will be no changes before April 2017 which will be a welcome relief to non-residents, who
faced losing both there personal allowances, as well as their favourable tax free capital
gains regime from 2015.
Non-residents will still need to consider the impact of the new Capital Gains Tax charges
in the investment returns they anticipate to receive from investing into UK residential
property. It may be the Stamp Duty Land Tax changes that have the biggest impact (and
could lead to investors opting for several smaller properties, rather than one or two large
ones) and which are adversely affected by the changes announced in SDLT rates in the
Autumn Statement.
© AES International
7
Summary of proposed changes (cont.)

8. UK residential property
tax exposure
After Stamp Duty Land Tax (SDLT) has
been considered, UK property assets
are currently exposed to 3 types of UK
tax.
8
Income Tax
Owners of rented properties will be
subject to income tax at the top rate of
45% once their UK sourced income
reaches £150,000 per annum. The
lower tax threshold rates for 2015 are
40% and 20% after the personal
allowance is removed from April 5th
2015.
Capital Gains Tax
All capital growth in property is subject
to either 18% or 28% upon sale (other
than principle private residence relief).
UK Inheritance Tax
Applicable to all UK situated assets at
40% unless appropriate tax structuring
is put in place. For example, £10m of
UK property held in a personal name
would be subjected to £4m of UK
Inheritance Tax upon the passing of the
owner.

9. Ways to hold UK residential property
There are typically three ways to purchase UK residential property:
1. Directly in own name;
2. Non-UK resident trustee; and
3. Non-UK resident company.
The table below summarises some of the key considerations for investors in UK
property when deciding which ownership route may be appropriate to purchase
their UK residential property in.
Personal ownership Non-resident
trustees
Non-resident
company
Confidentiality No Yes Yes
Succession
No Yes Yes
planning
SDLT on purchase
of property
Up to 12% Up to 12% Up to 15%
ATED No No Yes
CGT None currently if non-
UK resident. Applicable
from 6th April 2015.
None currently if
non-UK trustee.
Applicable from 6th
April 2015.
Yes, 28% tax accruing
on gains post 6th April
2013.
IHT Up to 40% on death. Up to 40% on death
of settlor and
potential lifetime
IHT charges.
No (provided
shareholder retains
non-domiciled/non
deemed domiciled
status).
9
© AES International

10. Potential UK residential property solutions
Individuals purchasing UK residential property have a number of solutions open to
them in order to mitigate, defer or remove the 3 UK taxes that apply.
With interest rates currently in the UK at 300 year lows, holding debt, commonly
known as a mortgage, against property has proved very popular since the financial
crisis began.
Debt can also be used to create a more efficient income from the property because
when structured correctly, income tax can be offset against the cost of borrowing. In
certain circumstances, any debt outstanding against a UK property upon an
individuals passing may also be deductible for UK Inheritance Tax, making debt
potentially an efficient way to hold UK property for non-UK domciles. Tax advice
must be taken in this respect.
For high net worth individuals, offshore private banks will also arrange bespoke
lending solutions, for example, against portfolios of investments, as well as
property. The advantage of this route is that borrowing costs can be cheaper and
higher amounts of borrowing achieved.
© AES International
Banking and lending
Offshore trust and offshore company
For many years, UK properties have been held by non domiciled individuals in
offshore companies or Special Purpose Vehicles (SPVs) to protect from UK
Inheritance Tax and also to add a layer of privacy. More recent legislation has meant
that holding UK property like this has become much less attractive, although many
non-domiciles still use this route despite the potentially higher stamp duty costs in
certain circumstances.
Offshore Trusts have often been used for succession planning in families and
continue to remain an attractive structure to hold UK residential property. They
offer a high level of control allowing a family to pass assets down to the next
generation in a timely and controlled manner.
Both Offshore Trusts and Offshore Companies can use debt to help structure their
assets in a tax-efficient manner.
10

11. Potential UK
residential property
solutions
Insurance
If a property is held in a personal name,
it is typically exposed to UK Inheritance
Tax, which is charged at 40% of the
value of the property at the date of the
passing of the individual. Allowances
including the nil rate band of £325,000
per individual are available to reduce
this tax.
As the complexity and the tax cost of
structuring property has increased in
recent years, because of the changes in
UK tax law affecting both domiciled and
non-domiciled individuals, many are
using high value insurance policies in
order to provide a high amount of cash
liquidity upon their passing, to be made
available to the beneficiaries of the UK
property (or other UK situs assets) so
that the UK Inheritance Tax can be paid.
When structured correctly, insurance
policies can prove very effective in
paying the UK Inheritance Tax due and
speeding up the process of probate so
that the property can be released from
probate.
© AES International
11

12. Resources and articles
HMRC calculator for the revised Stamp Duty Land Tax bandings to help you work
out the cost of purchasing UK residential property.
If you want to open an offshore bank account and enjoy the benefits of private
banking, including mortgages, you can download our free e-book “The Expat Guide
to Offshore Banking”.
And finally…… do you want to know the cost of living in London?
Speak to a financial
planner today about UK
property
A member of our award winning team
will be in touch within 24 hours.
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12

13. (05/14)
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