Declaration of trust - property tax implications

Hi, I have a rental property owned solely in my name. It is worth £750,000 and has a mortgage of £350,000. I am a higher rate tax payer and my wife is a standard rate payer. I would like to transfer 99% the rental income to her. I believe I can use a declaration of trust and Form 17 to do this. Couple of questions 1. Am I correct that I can use the declaration of trust and Form 17 for this? 2. When is it effective from? i.e. when we sign the Form 17 or the declaration of trust or both? 3. Is there any capital gains tax payable? 4. Is there any stamp duty land tax payable? 5. Is it possible to chance and or undo the declaration of trust at a later date? Thanks very much for your help Dan

Hi,

Form 17 lets married couples and civil partners declare unequal beneficial interests in jointly owned property and income.

If you are the sole owner of the property and it is not jointly owned, a form 17 declaration is not possible. If you retain 100% of the beneficial ownership, you are required to declare and pay tax on all rental income received, even if you pass some or all of this income to your wife.

If you were to transfer part of the beneficial ownership of the property to your wife, you would then be able to submit a form 17 to declare your unequal beneficial interests, along with supporting evidence (for example, a declaration of trust).

Your shares of the beneficial ownership of the property and your shares of any income arising from the property must be the same. The declaration would apply from the date you both signed the form 17, but the form must be received by HMRC within 60 days of your signature date. You can make a new form 17 declaration if your individual interests in the property change at a later date, but this would again need to be supported by documentary evidence.

TSEM9800 - Property held jointly by married couples or civil partners: contents

There wouldn’t be any Capital Gains Tax implications at the point of transfer, but any change in beneficial ownership could affect how the proceeds of any future disposal would be divided for Capital Gains Tax purposes.

Please contact the Stamp Duty Land Tax team for advice on Stamp Duty Land Tax.

Stamp Duty Land Tax

Thank you.