Capital Gain on a property sale

Hello, I’ve recently purchased a property (I am the only owner), but I have a contract with a business partner who shares with me any net profit I make on the sale of this property. As the title deed has only my name, would HRMC require me to pay capital gain on the whole profit (including his share), OR would each of us pay capital gain on our own share of the profit separately? Can you advise me, please? Thanks

Additional Notes: I own the property fully on the title deed, purchased with my cash, and paid the stamp duty myself. The agreement says that any net profit on the property sale will be shared with us. Who is liable to pay the CGT, both of us or only me as the property owner?

Extra note for clarification: this business partner secured the deal, and the initial agreement was to share any profit we make on the sale of this property. So, it was my cash and his skills in securing the deal.

Hi Nancy A,

As it is in your name only, you would be liable on all the gain (if any).
You would need to submit a declaration of trust to show that there is an alternative beneficial interest in the property to ensure you were both liable for the gain.

Thank you.

Thanks for your response. May I clarify if a Minute of Agreement that was done with a solicitor is satisfactory instead of a declaration of trust? My second question is about the receipts of refurbishment work done on a property. Do these receipts should be in the name of the owner of the property or can they be in someone else name? Like a business partner for example. to be valid for HMRC to provide CGT. Thank you

Hi,

As the property is in your name only, you are liable for the full gain. The agreement appears to be a business agreement on where you will share the profit but for the purposes of reporting it, HMRC would need to have sight of a declaration of trust in which you legally agree to transfering half of the beneficial interest to the other party in order for you both to be liable to capital gains.

Thank you.

Thanks for clarifying the point. Can you pls answer my second question about the receipts of refurbishment work done on a property? Do these receipts should be in the name of the owner of the property, or can they be in someone else name? Like a business partner for example. To be valid for HMRC.

Hi Nancy A,

Provided the agreement meets the criteria and the wording specified at TSEM9520 - Ownership and income tax: express trusts - written declaration
and TSEM9530 - Ownership and income tax: express trusts - deed then we will accept it.  
As regards the costs against Capital Gains, the costs being claimed are against the asset, the main point is establishing that they are allowable
expenses per CG15150P - Capital Gains manual: introduction and computation: computation: expenditure.  If they are, then they can be claimed.

Thank you.

Hi Nancy A,

If you have not paid for the refurbishement yourself and the business partner is not named on the deeds then you cannot claim these expenses as it has not been your expense.

Thank you.