The tax landscape for non-resident property investors has changed dramatically in recent years, particularly in respect of non-resident capital gains tax (NRCGT) and the reduction of tax benefits derived from having non-resident status. It has been suggested that this will lead to fewer real estate assets being held through offshore structures (Financial Times, 2022). Trevor explores the overall attractiveness of UK real estate and Jersey's structures.

Residential UK property asking prices are reported to have increased at their quickest pace since 2016 (The Business Times, 2022), a trend which some lenders are leveraging and reportedly lending up to seven times salary to exploit the opportunity (The Guardian, 2021). Meanwhile, banks, property funds and other institutional investors ploughed record cash into the UK’s rental property market last year, fuelling a boom that looks set to continue into 2022 owing to a chronic lack of homes in the country.

With the tax landscape for non-resident property investors having changed dramatically in recent years, particularly in respect of non-resident capital gains tax (NRCGT) and the reduction of tax benefits derived from having non-resident status, it has been suggested that this will lead to fewer real estate assets being held through offshore structures (Financial Times, 2022). However, despite these predictions, at VG we continue to see demand for new structures being established for this purpose.

Levelling the playing field

Historically, non-residents owning UK property through an overseas company could effectively eliminate any charge to CGT on profits arising on the sale of the property by selling their stake in the company. From 6 April 2019, all UK property and land became subject to NRCGT and the scope of CGT was extended to include indirect disposals. This change meant that when a non-resident sold shares in a property-rich company (where 75% of the gross assets are made up of UK property and land), in cases where they held at least a 25% stake, the transaction and therefore any profits arising would be subject to CGT.

Notwithstanding Brexit uncertainty and the effects of the COVID-19 pandemic on the valuation of commercial real estate such as build-to-rent, offices, hotel, and some retail properties, it seems clear that UK real estate remains of great interest to investors across the globe. In discussions with our clients, many have stated that the CGT changes have simply resulted in a ‘levelling of the playing field’ by bringing the UK in line with many other countries that seek to attract foreign investment.

Flexible solutions for pools of investors

It is important to consider the tax profile and mix of investors funding the transaction. Certain types of investors may be exempt from CGT so having a clear understanding of this will help to optimise the underlying structure and mitigate tax leakages that could negatively impact returns. Many assets are acquired by a pool of investors such that it is important to ensure that the vehicle being used to pool those funds is transparent for tax purposes, and investors do not suffer multiple levels of taxation. Structures including the Jersey Property Unit Trust (JPUT), which is not available under UK law, are frequently used to achieve this, because they are a tax transparent structure which can be sold without any transfer tax or SDLT. For this reason, JPUTs are very attractive to pension funds, sovereign wealth investors and other tax-exempt investors because of their inherent transparency.

Importantly, HMRC has included within the CGT legislation a provision to allow funds and other collective investment vehicles (CIVs) – including those structured as a JPUT – to make a transparency election. This means that CGT will not be payable by the vehicle but rather by the investors, as if they held the asset directly, thus ensuring that investors in CIVs are not unfairly disadvantaged by being taxed at multiple layers within the structure.


There is no doubting that the changes to CGT have reduced the direct economic benefit in structuring the acquisition of UK commercial real estate through a Jersey vehicle. However, structuring the acquisition of UK real estate through ‘offshore’ jurisdictions such as Jersey has never just been about tax; the decision will be driven by a combination of commercial and tax considerations. Equally there are many other reasons for non-resident investors to establish and remain offshore, including estate planning and asset protection and we see no reason to believe that existing portfolios held through Jersey will not only continue, but also to grow.

Jersey has a strong legal and regulatory framework which over the past 60 years has become very familiar to investors, advisers and managers who will continue to take advantage of Jersey company law which offers greater flexibility in comparison to the UK with respect to structuring returns and making distributions to investors, especially where they have a trusted and stable working relationship with expert service providers.

Just as the overall attractiveness of UK real estate to international investors looks set to hold, so too is the attractiveness of Jersey’s real estate structures unlikely to diminish.


19 March 2018

Jersey remains the ideal location for real estate investment structures

Jersey remains robust in the face of pressure and the industry continues to thrive, particularly for investment holding structures where real estate is a major asset class.

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