New tax rules requiring UK limited partnerships to pay 4% stamp duty on transactions are forcing many fund managers and property firms to relocate their ownership of partnerships offshore, the Financial Times has reported.
The new rules are due to come in to force in June of this year, and will affect around £17 billion worth of UK property owned by limited partnerships, an arrangement that has hitherto allowed the industry to escape the clutches of the stamp duty levy.
However, according to the FT, several firms are in the process of relocating their funds to offshore jurisdictions, or have expressed a desire to do so in the near future.
One such example is Morley Fund Management, which is reportedly transferring the ownership of half of its ten property limited partnerships, controlling £2.5 billion, to Jersey.
Legal & General and Australian firm Lend Lease, co-owner and manager of the Bluewater shopping complex, are also considering similar moves, the FT reports.
The new rules have prompted the president of the British Property Federation, David Hunt, to write to the financial secretary to the Treasury, Ruth Kelly, urging her to reconsider the proposals, which he fears will “wipe out” the legitimate use of limited partnerships for property holding purposes.
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