Rental income transfer to someone else

Hi, I have been reading the forum and I just wanted to clarify a couple of points. I am the sole owner of a flat that I will be renting out soon. I would like to transfer all the rental income to my partner. 1) Am I correct in thinking that I do not need to inform HMRC nor to send any document but instead I simply need a deed of trust that HMRC might or might not ask in the future? 2) Can the deed of trust be stopped at anytime? 3) if we do that (transfer 100% of the property rental income), are we commiting in the long term or that can be cancelled quickly at any time? Thank you

Hi
Thank you for your question.
1. You are correct, if a deed of trust is executed you must have this available for potential later inspection
2. You can execute a new deed of trust later on.
3. You would need to update your deed of trust if later the beneficial ownership/interest was to change.
You also need to consider the capital gains implications this as this would be considered a disposal for CGT purposes.

Hi Admin, can you please clarify for me also, just to confirm I am the sole owner of the flat. 1. my tenant currently pays on my bank account, and if I was going to transfer 70% of the rental income to my wife, would I have to ask the tenant to update my bank details or can I simply transfer the 70% of her rental income to her? 2. does the declaration of trust have to be any specific format or can I use the following format: [admin removed link]1 3. does the wife only need to update self-assessment and nothing else is required?

Thank you for your reply. I just wanted to come back on your latest point "You also need to consider the capital gains implications as this would be considered a disposal for CGT purposes." The CGT implications would only happen if we sell the flat while the beneficial owner is my partner correct? If I execute a new deed of trust so that the beneficial owner is me (who is also the owner) then when I sell the flat there is no capital gain implication to consider, am I correct? It would be like nothing happened? Thank you

Hi,
We would suggest that it would be your personal choice whether you updated your bank details as it is something that HMRC would not be concerned with.
2, Unfortunately we have not been given the example of the format you suggested.
Please refer to the following link in respect of the Declaration of Trust:
Trusts, Settlements and Estates Manual
3, Your wife would have to declare her share of the Income from Property in question from the date of the Declaration of Trust.  
Thank you.

Hi Incitae,

A declaration of trust could also impact upon who is liable to pay Capital Gains Tax in the event of a sale. With this in mind, it might be appropriate to remove the declaration of trust prior to sale so as to ensure both parties can fully use their CGT allowances.

Thank you.