The Government has acknowledged the findings of Graham Aaronson QC that a General Anti-Abuse Rule (GAAR) targeted at artificial tax avoidance schemes would improve the UK’s ability to tackle tax avoidance “while maintaining the attractiveness of the UK as a location for genuine business investment”. A consultation will follow with a view to introducing a GAAR to tax legislation in 2013.

In the meantime, in an attempt to ensure that taxpayers pay a “fair share” of tax on residential property as well as tackling perceived avoidance of tax, the Government has announced that:

  • With immediate effect (i.e. from 21st March 2012) Stamp Duty Land Tax avoidance schemes are to be closed down. In particular, legislation will be introduced to make it clear that schemes involving the grant or assignment of an option will not satisfy the SDLT sub-sale legislation. Also, avoidance via the “enveloping” of high value properties into corporate structures, is to be tacked by applying a rate of 15% on residential properties purchased for over £2m by what the Government describes as “non-natural persons”, broadly companies and certain partnerships.


  • It will consult on the introduction of an annual charge on residential properties valued at more than £2m that are owned by non-natural persons. While the intention is to introduce it with effect from April 2013, it is not clear what form this charge will take or how it will be calculated.


  • With effect from April 2013, the Capital Gains Tax (CGT) regime will be extended to gains on the disposal of UK residential property held by non-resident non-natural persons. This is a significant departure from one of the most important aspects of the UK tax code that non-residents (whether an individual, a company or a trustee) are not subject to CGT. It is likely to impact on a variety of offshore structures, but as the change will not apply until 2013 there is time for those affected to consider restructuring beforehand.