There are some proposals to soften the blow slightly:

• Tax will only be payable on gains attributable to changes in value from April 2019, so property values will need to be rebased at that time.
• Institutional investors such as pension funds may be excluded from the tax charge, but this is subject to consultation.
• Investors with less than a 25 per cent interest in a property-rich entity (throughout the previous five years) will escape the tax charge when selling their interest.

Most of the UK’s double tax treaties already allocate taxing rights to the UK on gains on disposals of UK real estate or shares in UK-property rich companies, and so treaty relief from this tax will not be available under those treaties. An anti-avoidance rule has been introduced with immediate effect to prevent a migration of structures to countries with more favourable UK treaty terms.

The stamp duty land tax (SDLT) position remains unchanged. So an SDLT saving remains from buying an offshore company owning the UK real estate, rather than the UK real estate itself.