De-enveloping

Question

CZ is a UK resident non-UK domiciled individual who has been resident in the UK since 2000. He lives in his Pimlico pied-à-terre (bought in 2012 for £2.2m) which is owned directly by CZ (BVI) Ltd which in turn is held by the trustees of a non-UK resident trust established by CZ’s mother in 1990. CZ is wondering whether the holding structure is really going to provide any benefit after April 2017 and is considering ‘de-enveloping’ before that date. What should CZ do?

Answer

CZ has no doubt been forced to think about the tax position of the property on a regular basis since 2013: the introduction of the ATED regime affected the property in 2013; and the introduction of non-residents’ CGT affected it in 2015. Now the application of inheritance tax to UK residential...