Key Takeaways
Jersey property unit trusts ("JPUTs") remain a well-established and widely used structure for investment into UK commercial real estate. When appropriately structured, JPUTs can offer tax neutrality, light-touch regulation and favourable outcomes under the UK's income tax, capital gains, stamp duty and VAT regimes, depending on investor profile and investment objectives.
JPUTs are frequently selected as an alternative to UK and Luxembourg corporate holding vehicles, particularly where investors value tax transparency, reduced structural friction and flexible exit options, and prefer not to rely on tax exemptions and treaty rules applicable in these jurisdictions (and which are subject to change). For certain investor groups - notably tax-exempt institutional investors, sovereign and quasi-sovereign investors, and US investors - JPUTs can offer material advantages compared to corporate real estate holding structures.
A JPUT is a Jersey law trust under which one or more trustees hold assets (typically UK commercial real estate) on trust for the benefit of unitholders pursuant to a trust instrument. A JPUT does not have separate legal personality, which distinguishes it from a company. The trustees hold legal title to, and are responsible for, the trust assets - although property and asset management functions are commonly delegated in practice. While the unitholders of a JPUT hold units in the trust similar to how shareholders hold shares in a company, as the JPUT is a trust the unitholders are the beneficial owners of the underlying assets – another distinguishing factor from shareholders of a company (who have no direct ownership rights).
In commercial terms, a JPUT often operates as a 'propco-style' holding vehicle: investors subscribe for, hold and transfer units (economically analogous to shares), rather than acquiring or disposing of UK real estate directly.
Despite changes to the wider tax and regulatory environment (including the April 2019 UK tax changes to nonresident UK real estate holdings), JPUTs remain a well‑established and widely used structure for UK commercial real estate investment for the following key reasons.
JPUTs can take a number of structural forms to suit an investor's particular needs, and for this reason we see a wide variety of structures used – whether the units are held by one or two unitholders (or more in joint venture scenarios), whether the underlying property is held directly by the trustee(s) or through nominee companies, whether one or more corporate trustees are appointed and whether or not the investor wishes to appoint a manager to act alongside the trustee(s).
The trust instrument can also be tailored to reflect commercial requirements, including bespoke governance arrangements, multiple unit classes, distribution waterfalls, voting thresholds, transfer restrictions, and compulsory transfer provisions in default or enforcement scenarios. Alternatively, the trust instrument can be prepared on a short-form basis to reflect a simple and flexible structure.
JPUT trustees are generally not subject to Jersey income tax or capital gains tax. JPUTs are commonly structured as transparent so that tax applies at investor level, in accordance with each investor's own tax profile and applicable tax rules.
This is particularly attractive to tax-exempt investors (such as certain UK and US pension schemes, insurance companies, and sovereign investors), as it avoids irrecoverable tax charges at entity level.
Please see below for more detail regarding specific UK and US tax advantages as we understand them (noting that specific tax advice should be taken as we are not qualified to provide this).
A purchaser can often acquire exposure to UK property by acquiring units rather than the property itself. This facilitates "corporate-style" exits, avoids SDLT on secondary transfers, and can be attractive to buyers seeking simplicity and transactional efficiency.
JPUTs are a long-established structure in the UK real estate market and are familiar to a wide cross-section of investors, lenders, advisers, tax authorities and regulators. This familiarity can reduce execution risk and support efficient transactional timetables.
JPUTs are generally quick to establish and benefit from streamlined and proportionate regulatory approvals.
As a trust arrangement, a JPUT has a lighter public filing profile than many corporate structures, although beneficial ownership reporting, compliance with Jersey's anti-money laundering, countering financing of terrorism and counter proliferation financing ("AML/CFT/CPF") regime, applicable tax reporting and lender disclosures remain relevant.
For UK-focused real estate investments, JPUTs are often preferred over offshore corporate holding vehicles because they avoid entity-level tax leakage, reduce reliance on treaty access and align closely with UK domestic tax transparency regimes.
Following the extension of UK tax to non-resident capital gains on UK property, corporate vehicles may incur tax both at entity level and on distributions. Furthermore, the ongoing imposition of capital gains tax on securities in Luxembourg in certain circumstances requires investors intending to utilise Luxembourg corporate vehicles to undertake careful structuring to benefit from the available exemptions and tax-treaties if they wish for these taxes not to apply.
Accordingly, a properly structured JPUT is therefore often seen as the preferred structure by which to ensure tax neutrality and mitigate or eliminate double-taxation for many investors.
JPUTs are typically established with one or more Jersey incorporated corporate trustees.
Where UK real estate is held directly by the trustees, at least two trustees are commonly appointed to (i) mitigate against the doctrine of overreaching under English property law; and (ii) meet lender expectations. This is often achieved by utilising two Jersey special purpose vehicles incorporated for the purposes of acting as trustees to the particular unit trust, such vehicles which are commonly known as private trust companies ("PTCs"). Some notable benefits of using PTCs include that the trustees will sit 'off-balance sheet' and on an exit the vendor can elect to include the sale of the shares in the PTCs to ease the administration burden that may arise on a change of trustee (particular where the trustees hold the UK assets directly).
In some cases, a single professional corporate trustee may be acceptable where UK real estate is not held directly, or whether other nominee arrangements are preferred, depending on the structure required by an investor.
Trustees owe fiduciary duties to the unitholders. The trust instrument constitutes the JPUT and governs how the assets are held and managed. Jersey trust law is modern, flexible and supported by a well‑developed body of jurisprudence suitable for commercial investment structures.
Trustees may appoint a manager, although asset and property management functions are often delegated at the property level.
The applicable Jersey regulatory treatment for a JPUT depends on its structure, intended investor base and, critically, whether it constitutes an investment fund for the purposes of Jersey financial services legislation.
The Control of Borrowing (Jersey) Order 1958 (as amended) ("COBO") was substantially amended with effect from 13 April 2026. The reforms significantly narrow the circumstances in which regulatory consent is required and are intended to remove unnecessary regulatory friction for professional, institutional and private capital structures.
Where a JPUT does not constitute an investment fund for Jersey regulatory purposes, no COBO consent is required. This represents a material change and applies irrespective of the number of investors, provided the JPUT is not operated as an investment fund.
As a result, many private capital, joint‑venture and single‑asset UK real estate JPUTs now fall entirely outside the COBO consent regime.
Any COBO consents previously issued in respect of non‑fund JPUTs automatically ceased to have effect on 13 April 2026, and compliance with conditions attached to those historic consents is no longer required.
A COBO consent may still be required in limited circumstances where interests in a JPUT are offered to retail investors in Jersey. The amended regime introduces a new statutory concept of 'retail investor'. In broad terms, institutional investors, professional investors, family offices, regulated entities and financially sophisticated persons fall outside the retail investor category.
Where interests are offered exclusively to non‑retail (professional or sophisticated) investors, or where the offering entity is Jersey‑domiciled and the JPUT is not an investment fund, COBO will generally not apply.
Regardless of the applicable regulatory classification, JPUTs remain subject to ongoing compliance obligations, including those relating to AML/CFT/CPF, sanctions, beneficial ownership, FATCA/CRS reporting and the appointment and oversight of regulated service providers.
Unlike corporate holding vehicles, a JPUT does not automatically operate as a US tax 'blocker'. This can preserve foreign tax credit efficiency and avoid unnecessary entity-level tax friction. JPUTs also avoid reliance on UK–Luxembourg treaty claims, substance rules or anti-treaty-shopping provisions, which are increasingly scrutinised.
In the wake of the proposed tax changes to be brought about by the 'One Big Beautiful Bill', we continue to monitor how this will impact US investment in UK real estate assets and whether this will result in an up-tick in transactional activity by those investors who can take advantage of some of the changes, particular those relating to foreign-controlled companies.
Where UK rental income is received, the UK non‑resident landlord scheme ("NRLS") may also apply. Under the NRLS, the relevant non‑resident landlord (which, in a transparent JPUT, may be the unitholder rather than the trustee) must register with HMRC to obtain approval for rental income to be paid gross. In the absence of such approval, UK tenants or letting agents are generally required to withhold basic‑rate income tax from rental payments.
As a practical point, transaction parties should confirm at an early stage which party is required to register under the NRLS (trustee, nominee or investor), as this can materially affect onboarding, compliance and cash‑flow during the initial operating period.
A number of regimes and elections introduced at that time remain central to the operation of JPUT structures:
UK stamp duty land tax ("SDLT") is not payable on transfers of units in a JPUT, which remains a key attraction of the structure. This facilitates corporate‑style secondary sales, partial stake transfers and co‑investment transactions without an SDLT charge at unit‑transfer level.
Where UK real estate is transferred into a JPUT, SDLT will generally apply to the transfer of the property to the trustees at market value, following the 2006 abolition of SDLT seeding relief for unit trust structures. The SDLT cost of establishment should therefore be considered at the structuring stage.
In practice, unit pricing often reflects the fact that a purchaser acquires interests in the JPUT rather than UK real estate directly and does not incur SDLT on a subsequent acquisition in the same way as an asset purchaser.
By contrast, acquisitions of shares in corporate property‑holding vehicles may be subject to pricing adjustments to reflect perceived stamp tax exposure, historic liabilities or anti‑avoidance risks. The established market practice of unit transfers in JPUTs can therefore support cleaner exits and stronger secondary market liquidity.
On the acquisition or disposal of property by a JPUT, it may be possible to structure the transaction as a transfer of a going concern, in which case VAT will not be chargeable, provided the statutory conditions are met.
VAT implications should be considered carefully at each stage of the JPUT's lifecycle, including acquisition, holding, financing, restructuring and exit.
Notwithstanding this limited public footprint, corporate trustees may be subject to Jersey's beneficial ownership reporting regime and, depending on their activities, Jersey's economic substance requirements.
A JPUT may also be subject to reporting obligations under the US Foreign Account Tax Compliance Act 2010 (as amended from time to time) ("FATCA") and the OECD's Common Reporting Standard (as amended)("CRS"), depending on its classification and investor profile. These requirements should be assessed at establishment.
Although JPUTs generally involve less public disclosure than corporate holding vehicles, banks, administrators, regulated service providers and, in some cases, investors will expect robust transparency to meet AML/CFT/CPF, sanctions, tax reporting and internal governance standards.
Commercially, the acquisition or disposal of units is broadly analogous to a private company share transaction. Transfers are subject to trustee approval (and, where applicable, manager consent) in accordance with the trust instrument and are conditional on the completion of satisfactory AML/CFT/CPF checks on incoming investors, in compliance with Jersey law.
Investors will also need to undertake appropriate due diligence on both the JPUT and the underlying assets.
As a practical diligence point, unit transactions typically focus on (i) verifying title to the units (ii) local and offshore tax elections and up-to-date filings, (iii) any historic regulatory consents or conditions, (iv) trust instrument restrictions (including change‑of‑control provisions), (v) property‑level liabilities (including VAT and option‑to‑tax history), and (vi) financing arrangements and related consent requirements.
Lending will typically be conditional on the lender being satisfied that all relevant structural, regulatory and documentary consents are in place and that the trust instrument adequately protects the lender's position as a secured creditor.
Trust instruments are commonly drafted to enable efficient enforcement over units by a secured party, including effecting transfers, with trustee discretion limited as appropriate, subject to mandatory regulatory and AML/CFT/CPF requirements.
Where property is sold prior to winding up, the tax treatment of gains will depend on whether a transparency election or qualifying fund exemption applies. Where assets are distributed in specie (whether as part of a hiveup or otherwise), the potential SDLT, capital gains tax and VAT implications must be assessed. Early tax advice is therefore essential when planning an exit or wind‑up.
Common exit routes include (i) a sale of the underlying property followed by distribution and wind‑up, or (ii) a sale of units. The preferred route will depend on purchaser appetite, anticipated tax outcomes, financing arrangements and the availability or impact of relevant elections or exemptions.
Senior Counsel/Jersey
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Jersey
