Offshore Mansion Tax Looming?

Rumours abound that the UK government are considering a move against offshore companies holding UK property in the next budget by imposing what is being referred to as an "offshore mansion tax".  The conservative party has always stood strongly against the Lib-Dems' desire to introduce a general mansion tax in the UK, primarily over fears that it would be politically disastrous in areas such as London and the home counties, where families who do not consider themselves to be rich may well own properties valued in seven figures.  However, it seems that this new variation on the theme, which would impose an annual tax of 1% of the value of homes worth over £2 million which are held in offshore structures, is seen as a more politically acceptable way of increasing tax revenue.  The rumours come in the wake of research which has established that there are 18,700 properties in London held through offshore structures, believed to be primarily so that the purchasers can avoid the need to pay stamp duty on sale.  This equates to roughly one in 20 properties in London, although anecdotal evidence from the capital's estate agents suggests that in the high-end boroughs such as Belgravia the proportion is probably closer to one in three.

The government apparently sees the Offshore Mansion Tax, which would only apply to properties which are held through offshore companies, as a politically popular means of recouping some of the cash lost through its inability to levy stamp duty on sales of the holding companies.