off shore company

[seems]

I have a new,relatively small property business, portfolio with over 200k net equity. I've been told that I can save on cgt liability if I set up an off-shore co & trust. I am non-domiciled in the UK.
What is a typical cost to set this up? What are on-going costs? Is this advice right? I am convinced by the cgt saving, but wonder if the costs of creating such a structure justify any savings.

[demetris]

First, you must know that offshore tax planning is a complictaed tax affair and it pays to get proper advice.

With regard to your existing properties and assuming they are held personally by you, transferring them to an offshore vehicle will automatically create a CGT liability based on market values. There will of course be taper relief and annual CGT exempt amounts available.
Therefore, if you go down that route, it might be a good idea if you transfer piecemeal.

the offshore company in which you will own the shares, will fulfil its purpose to save you CGT, on sales of any properties that the company sells in the future. As you are non-Uk domiciled, any gains will not be taxed in this country unless extracted from the copany and remitted in this country.

But you shouldn't ignore any CGT liability to the other country.

I hope this helps.
Demetris Savva BA FCCA
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[seems]

Are there any other benefits of having an off-shore company? What is the role of the trust? How can I find an expert adviser in this field??

[DF]

As said above there will be a capital gains charge on the transfer of the properties in to a company. However, this can be avoided with some advance planning.

A further potential benefit of maintaining the ownership of the properties through an offshore company is that you may be able to avoid inheritance tax on the value of the properties in the event of your death.

Owning the company via a trust is also a consideration as it affirds further tax planning opportunities. For example, you may be able to dispose of the properties free of capital gains tax AND be be able to remit the proceeds to the UK.

Costs for setting up an offshore company (excluding tax advice) are:

Incorporation £495 (one off)
Provision of directors, secretary, registered office etc £1295 (annual)
Company bank account £350 (one off)
Goverment fees in offshore jurisdiction £480 (annual)

For offshore company structures to work you need to divorce your ownership of the asset with the day to day management of the company. Normally, you would own the company as the sole shareholder but the company would be managed by an administrator in the offshore jurisdiction.

My company specialises in these type of offshore structures and I would be happy to discuss your requirements in more detail if of interest.

Please do not hesitate to contact me.

David Frier
Charered Tax Advisor
www.calmanx.com

tel: 01624 662262
fax: 01624 662272