Non taxable trust and beneficiary of rental income

I am a full time employee and pay my taxes via employer. I have set up a non taxable trust and transferred my rental property to my adult child, however the title of the property remain on my name. As an adult and beneficiary of rental income, she now receives the rental income and will be paying the taxes on all her income including rental income. Do I have any obligation to pay any remaining income taxes for that property?

Hi,

You can find guidance here:

TSEM9918 - Ownership and income tax: Specific types of property: land and buildings - taxation of rental income

Profits from UK and foreign land and buildings are treated for tax purposes as arising from a business (PIM1020). Under ITTOIA/S268, Income Tax is charged on the profits of a property business. Under ITTOIA/S271 the person liable for the income tax under S268 is the person receiving or entitled to the profits. 

As the child is now the beneficial owner of that income then they will be liable to tax on that income.

You can find guidance on legal ownership and beneficial ownership in TSEM9120 and TSEM9130 here:

TSEM9120 - Ownership and income tax: legal background: ownership - legal owner
TSEM9130 - Ownership and income tax: legal background: ownership - beneficial owner

Thank you.
 

Thanks for your response. As per your response, I understand, as my Adult child is beneficial owner (as beneficiary of rental income) and is liable for tax payment on the rental Income. Could you please confirm me being a legal owner of the property, do I have any tax obligation as legal owner of the property and settlor of the trust? I have checked guidance available online and I am not able to find an appropriate information. Thanks, 

Name removed admin 

Hi ,
 

Based on the detail you have provided your adult child will be liable to income tax on the rental income received as you have made them beneficial owner of that income. Therefore no you will have no further tax obligation as the legal property owner or settlor of the trust.   However any other income generated from the property and any future capital gain may be taxable as your income/gain. Thank you .

Hi, As mentioned above my adult child will be liable to income tax on the rental income received. I have submitted last self assessment for year 2023-2024 to HMRC yesterday. There is no addition untaxed income to be declared since July 2023. Can you let me know what is the process to have my SA account closed. Thanks

Hi
Please refer to Self Assessment tax returns